Social Audit by Networks Sa-Dhan, India

MFI Stakeholders’ Concerns & Social Performance MFI Clients Govt. agency Client protection Govt. agency Client protection Investors Asset Size, Quality & Client Relation Investors Asset Size, Quality & Client Relation Rating Agency Financial & Client satisfaction Rating Agency Financial & Client satisfaction Banks Asset size, Quality & Client Relation Banks Asset size, Quality & Client Relation Regulator Transparency, efficiency & client relation Regulator Transparency, efficiency & client relation Political Parties Client protection Political Parties Client protection All Client Focused

Social Performance Effective Translation of MFI Mission into practice… Effective Translation of MFI Mission into practice… SP is all about the result … SPM is about the system, people, process etc in MFIs to achieve SP SP is all about the result … SPM is about the system, people, process etc in MFIs to achieve SP Intent & Design Internal systems & Activities Output Outcome Impact SPM SP SP Continuum Social Audit / Social Rating

Why Networks to do Social Audit/Social Rating Networks must help MFIs to ‘MANAGE’ their Social performance..because SP is NOT AUTOMATIC. Networks need to ‘MEASURE’ the measures taken by their MFIs to manage their Social Performance The Networks need to ensure that their MFIs are SOCIALLY RELEVANT and that they PERFORM WELL on that front Social Audit /Rating helps the Networks to gauge how their MFIs ‘MANAGE’ SP

Social Audit vs Social Rating Social Audit Social Rating Normally Not Graded –Not PublicPublic- Can be published Towards Improving PracticeOpinion on Existing Practice Guided Self evaluationIndependent Evaluation Gauging Internal Strength & WeaknessAssessment by Externals- Investors/Donors Good for MFIs at all stagesBetter for MFIs with established SPM

We Underwent SA- raining

The Audit Tool –SPI ( CERISE) TARGETING & OUTREACH PRODUCT & SERVICES BENEFITS TO CLIENTS SOCIAL RESPONSIBILTY Geographical Targeting ( 5) Individual Targeting ( 6) Pro-poor Methodology (6) Range of Traditional Services (7) Quality of Service (6) Innovative & Non Fin. Services (6) Economic Benefit to clients ( 7) Client of Participation ( 6) Social Capital / Client Engagement (4) SR to Employees (7) SR to Clients (6) SR to Community & Environ (4) A tool with 4 Dimensions, 12 criteria and 70 sub indicators

Sa-Dhan Team Held the Social Audit Exercise in Varanasi, North India

Audit Exercise – Documents perused 1.Board Composition 2.Board Resolution 3.General Body Resolution 4.Annual Reports & Financial statements 5.Product Description –Circulars 6.Client Targeting Tool used 7.Non-Finance Services – Description 8.MIS and Company consolidated Reports 9.Business Plan 10.Code of conduct Documents 11.Loan Card & Pass Book 12.Loan Manual 13.Client Survey Results

SPI Results 70 / 100 Targeting the poor and excluded ***2524 Adaptation of services ***2515 Benefits to clients **2514 Social responsibility ***2517 Geographic Targeting99 Range of traditional services73 Economic benefits86 SR to employees97 1.1Areas of intervention22 2.1# of loan products10 3.1Tracking changes in client situation11 4.1Salary scale11 1.2% of branches from underdeveloped areas22 2.2Emergency loans11 3.2Staff training in social performance management10 4.2Permanent contracts22 1.3Verification of poverty level22 2.3Loan tailored to social needs11 3.3Social performance appraisals11 4.3Access to training11 1.4% of clients in rural areas11 2.4Loans tailored to productive needs10 3.4Corrective measures11 4.4Participation in decision making10 1.5Service in areas with no other MFIs22 2.5Local adequation of services10 3.5Reducing costs strategy11 4.5Health coverage11 2.6Saving products11 3.6Formal benefits policy22 4.6Specific policy for woman staff11 2.7Saving tailored to social needs10 3.7Measures in case of collective disaster10 4.7Staff rotation21 Individual targeting10 Quality of services97 Client participation92 SR to clients99 1.6Tool for targeting of poor clients11 2.8Decentralization aDecision making at the client level11 4.8Avoiding over-indebtedness22 1.7Ensuring adequate use of targeting tool11 2.9Timely delivery bDecision making at the board level10 4.9Cost transparency22 1.8Targeting incentives Interest rate22 3.9Representation of clients in committees Credit conditions and collection practices22 1.9% of poverty of new clients Feedbacks from clients Involvement of clients at the management level Code of conduct % of woman clients Client retention rate Women representation Grievance procedures % marginalized clients Study on drop outs Training of representatives Client confidentiality Effectiveness of participatory bodies20 Pro-poor methodology95 Innovative and non financial services95 Empowerment86 SR to community and environment Unsecured loans Innovative services Problem solving beyond financial services Social responsibilities to the community Altenative collateral for productive loans Mobile services Woman empowerment Local social and economic development Small loans Strategic alliances Transparency to clients/members Environment policy/financed activities Small installments Management NFS Support for client influence Environment policy/MFI activities Small saving amounts Social NFS Cross-subsidization Adaptation of NFS to clients' needs21 Final Score Sheet – An Excel Sheet

Result Graph on the MFI Audited 4 Dimensions

4 Dimensions in Diamond Graph

Results on the Criteria

The Criteria Results recast

Social Audit Implications Social Audit Results Corrective Promotional + ve ResultsNot so + ve Results Feedback Supportive policy & Good will Self correction for better SP Govt. Regulator MediaMFI Advocacy

In Essence… Social Audit for Networks is what Stethoscope for a physician Social Audit for Networks is what Stethoscope for a physician Networks can easily install Social Audit system Social Audit Results could aid nurturing socially responsible MFIs and sector Thanks Natarajan, Sa-Dhan