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