Indian Microfinance Institutions Certified for Keeping Clients First

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Certificates awarded by Shri Jairam Ramesh, Honorable Union Minister for Rural Development, Government of India

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NEW DELHI: Smart Campaign, a global initiative to incorporate strong client-protection practices into the microfinance industry, publicly recognized FIVE Indian Microfinance institutions that were Client Protection Certified for meeting strong standards of client care: Bangalore-based Ujjivan and Grameen Koota, Chennai-based Equitas, Varanasi-based Cashpor and Mumbai-based Swadhaar.

Shri Jairam Ramesh, Minister for Rural Development, Government of India handed over the certification awards to the Microfinance Institutions who join seven others from Latin America, Eastern Europe and South Asia that have been certified since the program was launched in January 2013. The certification awards ceremony was a part of a special event hosted by the Smart Campaign and included a panel discussion on the significance and importance for client protection titled, “Client Protection for Financial Inclusion: The Way Forward in India.”

Panelists participating in this session included Mr. Vishwavir Ahuja; MD and CEO of Ratnakar Bank; Mr. Krishna Kumar, MD of the State Bank of India; Mr. P.K. Saha, head of SIDBI Foundation of Micro Credit; Mr. Girish Nair, Senior Operations Officer at the IFC; and Mr. Suresh Krishna , Head of Grameen Koota, a certified institution. The panel was moderated by Larry Reed, Director of the Microcredit Summit Campaign and a Steering Committee Member of the Smart Campaign. The discussion framed the importance of client protection within the broader context of financial inclusion, which in India includes a vast and diverse set of stakeholders.

Smart Campaign Certification by Shri Jairam RameshThe Smart Campaign’s Client Protection Certification program publicly recognizes those institutions providing financial services to low-income households whose standards of care uphold the Smart Campaign’s seven Client Protection Principles. These principles cover such important areas such as pricing, transparency, fair and respectful treatment and prevention of over-indebtedness. The certification program contains a rigorous set of standards against which institutions are evaluated by independent, third-party raters that are licensed by the Smart Campaign. The raters – Planet Rating, M-CRIL, MicroFinanza Rating and MicroRate – are established, specialized microfinance rating agencies with extensive experience, having analyzed hundreds of institutions to date.

“We had already undertaken a lot of programs 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 micro finance 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.

The five institutions certified in India – Ujjivan, Grameen Koota, Equitas, Swadhaar and Cashpor – have long demonstrated a commitment to client protection. Prior to undergoing certification, all institutions were evaluated by the Smart Campaign on their practices, and contributed to the development of Smart Campaign tools to help advance the sector. Over the last two years, the Smart Campaign has been working in India with more than 90 MFIs to help prepare the microfinance industry to improve their practices and ultimately meet the standards of certification.

 

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