LAPO adopts client protection principles

Lift Above Poverty, Microfinance Bank Ltd has adopted and embedded the six principles of client protection into her core business operations.

Godwin Ehigiamusoe, Managing Director, said the six principles are part of  the microfinance-industry initiative to ensure that low-income clients of microfinance are adequately protected against exploitation and un-ethical practices.

The six principles are Avoidance of Over-Indebtedness, Transparent and Responsible Pricing, Appropriate Collections Practices, Ethical Staff Behaviour, Mechanisms for Redress of Grievances and Privacy of Client Data.

He noted that LAPO has taken steps to realize the objectives of these principles. These steps according to him include the strengthening of LAPO’s Client Relationship Unit, substantial reduction in interest rates and charges and relevant training for credit staff.

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Self regulation for a sustainable future

CHENNAI: A network of NGOs has decided to take the first step towards self regulation by adopting a set of guidelines on financing, administration and ethics to be followed in running an NGO.

The guidelines, proposed at a conference of NGO leaders, aim to attain sustainability through self regulation and also expected to build confidence of the NGOs with banks, thereby boosting the microfinance sector.

"Along with the growth and spread of microfinance organisations come concerns over quality and sustainability of the various NGOs and SHGs in question. That's why we have come together to develop a self regulation framework," said M Kalyanasundaram, Chief Executive of the International Network of Alternative Financial Institutions (INAFI), that organised the conference last September 18.

Among the guidelines adopted were maintaining transparency in book keeping, promotion of financial literacy among microfinance clientele and the facilitation of inclusive financial growth.

The guidelines also insist SHGs and NGOs to campaign against usurious lending practices in the microfinance sector.

Banking officials welcome the self regulating initiative with enthusiasm. "SHGs need to keep in mind that banks and other institutional lenders are worried over the repayment of loans. In the absence of regulations, banks can only do so much," said N S Mishra, GM of Indian Overseas Bank.

He suggested that collectives, like INAFI, that bring SHGs and NGOs under a single banner could help enforce self regulation.


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Nigeria's microfinance policy review underway

Nigeria's microfinance sector has failed to make the expected impact on the economy due to misconception by the operators, but this will soon change.

Lamido Sanusi, the Central Bank governor, said the bank will come up with a reviewed policy framework in order to make it more effective.

Akintunde Sowunmi, deputy director, development finance, who represented Mr. Sanusi at a conference organised by Credit Awareness yesterday in Lagos said less than three percent of the rural population of Nigeria have access to microfinance services.

Mr. Sowunmi said one of the challenges is to create awareness about credit acquisition in order to make more people interested in accessing it.

"Despite the importance and benefits of credit, there are socio-economic barriers inhibiting access to financial services such as education, gender, age, irregular income, poor infrastructure, and even geographical location," he said.
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G20 Identifies nine principles for innovative financial inclusion, action plan expected in November

The G20 Leadership Summit in Toronto this past weekend highlighted the importance of the work being done by the G20’s Financial Inclusion Experts Group (FIEG). The group released nine “Principles for Innovative Financial Inclusion” formed through the efforts of the Access through Innovation Sub-Group (ATISG). “We have developed a set of principles for innovative financial inclusion, which will form the basis of a concrete and pragmatic action plan for improving access to financial services amongst the poor. This action plan will be released at the Seoul Summit,” the Toronto declaration said. Read more