Client protection

Globally, the Smart campaign has worked with diverse stakeholders to evolve client protection principles (CPP).  In India, we have the Unified Code of Conduct developed by the Microfinance Networks – Sa-Dhan and MFIN. Finally and importantly since these are mandatory, we have the directives contained in the Reserve Bank of India’s Fair Practice Code for microfinance NBFCs (2012) and the RBI guidelines issued as a sequel to the Malegam committee in 2011.

There are major industry initiatives for client protection in microfinance.  Globally, the Smart Campaign is working to develop principles of client protection.  http://www.smartcampaign.org/.  

Within India, the networks of MFIs have developed a Unified Code of Conduct.

EDA supports these initiatives to develop strong systems for responsible finance.

Client protection and Code of Conduct Compliance is included in our:

•     Training programmes
•     Social performance management
•     Social performance assessments

Bringing together the directives and guidelines for MFIs and other stakeholders in India

The different directives, guidelines and indicators are set out in their respective documents, with different headings and language.  This leads to some confusion around which is the best practice for MFIs to try and follow, and what needs to be assessed (or certified).  Nevertheless we see overlap and convergence around general principles and values of client protection.  Drawing on this convergence EDA has developed a straightforward and relatively short guide that sets out the Reserve Bank of India (RBI) directives as well as Unified Code of Conduct (UCOC) guidelines within the framework of the client protection principles of the global Smart Campaign.

We hope this document is useful for all stakeholders in microfinance in India.  It emerges from EDA’s work providing technical assistance for social performance to MFIs in India, including training, mentoring and assessments, as well as our association with Sa-Dhan and the Smart Campaign. 

EDA’s work in social performance in India is currently supported by the Ford Foundation and Opportunity International (Australia).

.