Microfinance is big business in India. It’s a $4.5 billion portfolio serving more than 37 million clients and an innovative financial tool that combats poverty. But it does not come without its complications. Success has been difficult to evaluate in an industry with the daunting goals of delivering a return on investment and supporting social progress among customers. The financial side of the equation is a little easier; it’s dictated by established norms. But there’s little discipline around measuring and reporting on social returns.
We aim to ensure client protection and responsible finance practices in microfinance so that the benefits of market-based opportunities reach urban poor families. We support initiatives with the potential to drive industry-wide adoption of microfinance social performance indicators.
Those initiatives include the Progress Out of Poverty index, which tracks a set of standardized metrics to assess the social performance of MFIs. We also support the nationally-adopted Common Code of Conduct for Microfinance Institutions and are now currently supporting the development of a similar Code of Conduct for Business Correspondents in India. This aims to standardize customer centric practices such as disclosures made to the client at the time of loan sanctioning, ensuring that the client has the best information and ability to compare different financial products.
