Indian MFIs and the Smart Campaign Collaborate to Release Tool: ‘Client Protection in the Group Lending Process – India’

> Posted by Center Staff
Washington, D.C., March 10, 2011 — The Smart Campaign, a global initiative to incorporate strong client protection principles across the microfinance industry, today released a tool tailored for Indian microfinance institutions (MFIs) using Grameen-style “group of groups” lending methodology.
The Smart Campaign’s India-based team led the development of the tool in collaboration with two Indian MFIs, Grameen Koota and Ujjivan.
“We’re excited about the new tool ‘Smart Lending: Client Protection in the Group Lending Process – India‘,” which is designed to help Indian MFIs incorporate good client protection practices into their group lending policies and operations,” said Smart Campaign Director Isabelle Barrès. “We’re proud that it takes into account the on-the-ground experiences of Indian MFI professionals.”
“Ujjivan is delighted to have been a part of this collaborative effort and to have had the opportunity to both share our rich experience with others in the sector and learn from their best practices. This tool will be a valuable resource to help MFIs renew their focus on client protection,” said Dhruv Taneja, Regional Credit Manager (South India) of Ujjivan.
“It is important that all MFIs practice standard client protection principles, as most of the Indian MFIs practice a group lending model. This new tool helps in bringing transparency and standardization to the client protection principles and also helps in educating the stakeholders in the best practices adopted by the MFIs,” said Suresh Krishna, Managing Director, Grameen Financial Services Pvt. Ltd.
“The Indian market recently has shown a lot of interest in focusing on better client protection practices,” said Barrès. “The tool identifies each distinct point of interaction between MFIs and clients during the lending process, and demonstrates how, for each one, Indian MFIs can model good practices in client protection in their policies and operations.”
The tool also identifies the relevant Client Protection Principles and provides recommendations for the use of other client protection tools that could help MFIs improve their practices. The new release joins a suite of other tools designed to help MFIs understand and improve their client protection practices, including case studies, guidelines, and PowerPoint trainings.
“Though many institutions have long used group lending, even tried-and-true methods of this type will benefit from greater focus on protecting clients through: avoiding client over-indebtedness, transparency, responsible pricing, appropriate collections practices, ethical staff behavior, effective mechanisms for managing client complaints, and client data privacy,” said Barrès.
For more information, please contact Smart Campaign Communications Manager Charlotte Connors at charlottec@smartcampaign.org or +1 (202) 393-5113 ext 1667.
About the Smart Campaign
The Smart Campaign is a global campaign consisting of microfinance leaders from around the world who believe that protecting clients is not only the right thing to do but the smart thing to do. To date, over 1,700 microfinance and other financial institutions, microfinance support organizations, investors, donors, and individual industry professionals have pledged adherence to the Smart Campaign’s core Client Protection Principles. By providing microfinance institutions with the tools and resources they need to deliver transparent, respectful and prudent financial services to all clients, the Smart Campaign is helping the industry maintain a dual focus on improving clients’ lives while attaining financial sustainability. The Campaign is headquartered at the Center for Financial Inclusion (CFI) at ACCION International and is governed by a Steering Committee representing a broad cross-section of the industry.
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