Washington, DC, October 25, 2011 — The Smart Campaign, a global initiative to incorporate strong client protection principles across the microfinance industry, received a grant of US$350,000 from the International Finance Corporation (IFC) to help Indian MFIs incorporate client protection practices into their operations.
The Campaign will work with Indian MFIs to develop the tools and resources they need to deliver transparent and prudent financial services to all clients. The grant will fund training sessions, on-site assessments and tools to institutionalize adherence to the Smart Campaign’s Client Protection Principles, which include: (1) appropriate product design and delivery, (2) prevention of over-indebtedness, (3) transparency, (4) responsible pricing, (5) fair and respectful treatment of clients, (6) privacy of client data, and (7) mechanisms for complaint resolution.
The work will be carried out in a number of ways:
- Client Protection Principles Training – The Campaign will conduct eight training sessions, each to be attended by staff from eight to ten MFIs, focused on building the Client Protection Principles into company policy and practice.
- Client Protection Self-Assessment by MFIs – The Campaign will seek to engage 75 MFIs in self-assessments, enabling participants to identify their vulnerabilities, strengths and weaknesses on the client protection front. These assessments highlight the degree to which their current practices foster client protection – for example, whether employee incentives encourage loan volume at the expense of portfolio quality. The assessment is through a questionnaire laying out best practices in every aspect of client interaction, from employee training through client education and loan collection.
- In-Depth Third-Party Client Protection Assessments – The Campaign will conduct week-long, on-site “Smart Assessments” of client interaction at 19 MFIs, evaluating institutional policies and practices with respect to the Client Protection Principles.
- Pilot Initiatives for Improving Client Protection in Practice – Based on the recommendations from the Smart Assessments, seven MFIs will choose a specific area to improve (e.g. collections practices). The Campaign will then work with each MFI to design a client protection pilot project to be monitored on a quarterly basis.
- Training “Smart Assessors” – The Campaign will conduct two training sessions with personnel from three MFI networks, each of which is comprised of dozens, even hundreds of MFIs as members. The four-day course will qualify participants to conduct Smart Assessments, thus enabling broad dissemination of these rigorous analyses.
- Smart Notes – The Campaign will follow up on eight Smart Assessments with published short reports known as Smart Notes. These briefs highlight good practices at specific institutions that can serve as models to the microfinance community.
Isabelle Barrès, Director of the Smart Campaign, commented: “Having won broad industry adherence to the Client Protection Principles over the past two years, the Smart Campaign is focused in 2011 and 2012 on improving adherence through assessment, training and development of tools that can help MFIs improve their practices. The IFC grant will help to jump-start these concrete steps to improve client protection on the ground in India, the world’s largest microfinance market.”
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 2,261 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.
IFC, a member of the World Bank Group, is an international organization whose mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC provides advisory services by establishing partnerships with donors, governments and the private sector to design and deliver technical assistance programs that promote entrepreneurship, improve the investment climate, mobilize private sector investment and enhance the competitiveness of micro, small and medium enterprises. IFC, through its Access to Finance business line promotes projects in microfinance, e-banking, affordable housing finance, leasing, small and medium enterprise (“SME”) finance, agriculture finance, sustainable energy finance, trade finance, insurance, payment systems, credit bureaus and capital markets in South Asia.
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Manager, Operations and Communications
The Smart Campaign
Tel. +1 202-393-5113 ext 1667