EDA Rural Systems, India
Social Performance and client protection
Ragini B Chaudhary
SR: Clients
6 Principles of Client Protection Avoidance of Over-Indebtedness Transparent and fair Pricing Appropriate Collections Practices Ethical Staff Behavior Mechanisms for Redressal of Grievances Privacy of Client Data
Avoidance of Over- indebtedness
•Growing concern for most MFIs•MFI clients borrow from multiple sources – usually from
multiple MFIs• Adverse effect on the wellbeing especially of women on
account of over- indebtedness• Avoiding over-indebtedness makes business sense – it
reduces credit risk• In context of women clients –
What appraisal practices can be employed?
Appraisal of client v/s households
Transparent and Fair Pricing
• Transparency applies to clear representation of all terms of the financial services• Fees and charges – one time
and recurring• Eligibility criteria• What efforts can be made to
ensure that terms are clear to the women clients?• How can they compare
competing products?
Appropriate practices in collection
• What are the ethical practices in enforcing collection?• Can MFI staff be gender
sensitive in collecting over-dues?
Grievance Redressal
• What are the mechanisms for clients for greivance redressal?
Usual practice includes:- Phone no on pass books- Suggestion boxes at branch
offices
Is this enough?
Ethical behaviour of Staff
Clients need to be - treated with dignity - and respect - at all times- shown cultural
sensitivity
Privacy of Client Data
- What does it mean in our context?- Credit history can be leveraged- Becomes critical in case of savings led programme- What risk does it entail for a women client if her dealings with MFI are
shared without her knowledge or permission?
SR: Staff
Organisational policies and
practices including:
• staff training • salary structure• gender equality – equal pay for
equal work• gender sensitivity – appropriate
working conditions • safe working conditions• feedback mechanisms for staff• their involvement in decision-
making• staff satisfaction surveys (annual/bi-
annual)
Social Performance – mission into practice
• About process and results – the steps to achieve impact
• Social performance ‘pathway’:
Intent Operations Results
MISSION
IMPACT
Social Performance Pathway: Strategy and Operations
Next Steps
• Client protection non negotiable• Checking over indebtedness critical part of loan
application/loan appraisal. • Checking awareness about product terms part of GRT• Written code of conduct with a gender lens necessary for
field staff• Compliance with code of conduct built into staff appraisal
and incentives.• Consensus among MFIs to express interest as EIR