 "MFIs certified for client protection")
Microfinance institutions, which have been affected in the aftermath of a series of suicides by debt-ridden customers in Andhra Pradesh, are increasingly seeking certification for client protection in a bid to gain credibility.
This week, five MFIs received certification for client protection from Smart Campaign, a global initiative to incorporate strong client-protection practices into the microfinance industry. They are: Bangalore-based Ujjivan and Grameen Koota, Chennai-based Equitas, Varanasi-based Cashpor and Mumbai-based Swadhaar. Minister for Rural Development Jairam Ramesh handed over the certificates to the MFIs who join seven others from Latin America, Eastern Europe and South Asia that have been certified since the programme was launched in January 2013.
The certificate is given on the basis of principles like pricing, transparency, fair and respectful treatment and prevention of over-indebtedness.
“We had already undertaken a lot of programmes for customer protection, but to get it independently validated gives it so much more credibility to the external world and also internally to say we are going in the right direction,” said Samit Ghosh, the CEO of Ujjivan, one of the certified institutions.
“Microfinance emerged in the wake of inability of the formal sector banks to be client-centric and reach the excluded sections of the society. As such, it is important that the focus of microfinance remains on clients. Initiatives like Client Protection Certification ensure that this focus is not diluted,” said Dr Alok Misra, CEO of M-CRIL, one of the licensed rating agencies.
This week, five MFIs received certification for client protection from Smart Campaign, a global initiative to incorporate strong client-protection practices into the microfinance industry. They are: Bangalore-based Ujjivan and Grameen Koota, Chennai-based Equitas, Varanasi-based Cashpor and Mumbai-based Swadhaar. Minister for Rural Development Jairam Ramesh handed over the certificates to the MFIs who join seven others from Latin America, Eastern Europe and South Asia that have been certified since the programme was launched in January 2013.
The certificate is given on the basis of principles like pricing, transparency, fair and respectful treatment and prevention of over-indebtedness.
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The certification programme contains a rigorous set of standards against which institutions are evaluated by independent, third-party raters that are licensed by Smart Campaign. The raters – Planet Rating, M-CRIL, MicroFinanza Rating and MicroRate – are established, specialised microfinance rating agencies with extensive experience, having analysed hundreds of institutions to date.
“We had already undertaken a lot of programmes for customer protection, but to get it independently validated gives it so much more credibility to the external world and also internally to say we are going in the right direction,” said Samit Ghosh, the CEO of Ujjivan, one of the certified institutions.
“Microfinance emerged in the wake of inability of the formal sector banks to be client-centric and reach the excluded sections of the society. As such, it is important that the focus of microfinance remains on clients. Initiatives like Client Protection Certification ensure that this focus is not diluted,” said Dr Alok Misra, CEO of M-CRIL, one of the licensed rating agencies.