When most microfinance clients start out, they’re first-timers at a formal financial institution. Like anything unfamiliar, a first foray with banks can be intimidating. You don’t want to be duped or make a mistake and lose precious savings. Peace of mind was granted to clients of two microfinance institutions, one in Paraguay and the other in the Dominican Republic recently as the first Smart Certifications in those countries were awarded. Fundacion Paraguaya and Banco ADOPEM were certified as meeting all the standards needed to treat their clients with adequate care. This certification demonstrates to prospective clients as well as investors and other industry stakeholders that their institutions are operating responsibly.
Fundacion Paraguaya and Banco ADOPEM are both market leaders in their own right. Banco ADOPEM is one of the largest microfinance institutions in the Dominican Republic. According to the MIX, 351,000 depositors in the Dominican Republic bank with Banco ADOPEM. When Banco ADOPEM pursues and achieves Smart Certification, that sends a message to MFIs and other stakeholders in the country that client protection is a key priority. In 2014 ADOPEM was named “Most Innovative Microfinance Institution of the Year” by Citi, in part because of ATA-Movil, a portable electronic application that allows credit advisers to assess customers in their businesses or in their homes. The mobile information system also allows for convenient and direct communication with clients.
Mercedes de Canalda, President and Founder of Banco ADOPEM, told the Smart Campaign that the MFI’s decision to pursue Smart Certification was to evaluate the institution’s policies and practices against the industry’s best practices in areas like transparency and communication with clients. She said, “The deep evaluation of our policies and procedures opened our eyes to what we can improve. The biggest advantage is that it gave us reasonable and concrete goals and a specific timeline to improve our practices. It was a detailed requirement. It challenged us to innovate and continue to improve to ensure that clients are treated well and that they are heard.”
Fundacion Paraguaya has long been a leader and innovator in microfinance and in the broader fight against poverty, contributing to areas like poverty assessment, financial inclusion for persons with disabilities, and youth empowerment. The Global Microscope 2015 reports that client protection regulation in Paraguay is lacking. For example, it lacks strong grievance redressal mechanisms and does not adequately prevent aggressive collection practices. The report also finds there are mounting concerns over over-indebtedness among lower-income groups in the country and that the government needs to devise and implement a national program to ensure greater education about financial services. Fundacion Paraguaya, along with its strong client protection practices, offers a range of financial education services, including services to children and youth via uniquely structured, financially sustainable programs.
There have been a number of other recent Smart Certifications: Amret Microfinance, Prasac, Sathapana Bank, and VisionFund in Cambodia; Grooming Centre and Fortis Microfinance Bank in Nigeria; AgroInvest in Serbia; Pro Mujer in Nicaragua; FINCA in Georgia; Annapurna Microfinance in India; Tamwil El Fellah in Morocco; Pichincha Microfinanzas in Ecuador; and FINCA in Mexico. The total number of certified institutions is now 60, and together these institutions serve over 26 million consumer protected clients.
For more on Smart Certification, including a listing of certified institutions, visit the Smart Campaign website.
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