NEW DELHI, INDIA, (December 10th 2013) - The Smart Campaign, a global initiative to incorporate strong client-protection practices into the microfinance industry, on Monday December 9th publicly recognized 5 Indian institutions that have become Client Protection Certified for meeting strong standards of client care: Bangalore-based Ujjivan and Grameen Koota, Chennai-based Equitas, Varanasi-based Cashpor and Mumbai-based Swadhaar.
The institutions join seven others from Latin America, Eastern Europe and South Asia that have been certified since the program was launched in January 2013. Together, the 12 certified institutions serve more than 3.4 million clients worldwide, with many more microfinance institutions are on their way to certification. The awards ceremony was attended by Shri Jairam Ramesh, Union Minister of Rural Development, who helped distributed certificates to the honored institutions.
The Smart Campaign’s Client Protection Certification program publicly recognizes those institutions providing financial services to low-income households whose standards of care uphold the Smart Campaign’s seven Client Protection Principles. These principles cover such important areas such as pricing, transparency, fair and respectful treatment and prevention of over-indebtedness.
“We had already undertaken a lot of programs for customer protection, but to get it independently validated gives it so much more credibility to the external world and also internally to say we are [going] in the right direction,” said Samit Ghosh, the CEO of Ujjivan, one of the certified institutions.
The certification awards ceremony and recognition took place at a special event hosted by Smart Campaign during the 10th Annual Microfinance India Summit, the largest microfinance gathering in India, held every year in Delhi. The evening event included a stimulating panel discussion on the significance and importance for client protection titled, “Client Protection for Financial Inclusion: The Way Forward in India.” Panelists participating in this session included Mr. Vishwavir Ahuja; managing director and CEO of Ratnakar Bank; Mr. Krishna Kumar, managing director of the State Bank of India; Mr. P.K. Saha, head of SIDBI Foundation of Micro Credit; Mr. Girish Nair a Senior Operations Officer at the IFC; and Mr. Suresh Krishna , Head of Grameen Koota, a certified institution. The panel was moderated by Larry Reed, Director of the Microcredit Summit Campaign and a Steering Committee Member of the Smart Campaign. The discussion framed the importance of client protection within the broader context of financial inclusion, which in India includes a vast and diverse set of stakeholders.
The certification program contains a rigorous set of standards against which institutions are evaluated by independent, third-party raters that are licensed by the Smart Campaign. The raters – Planet Rating, M-CRIL, MicroFinanza Rating and MicroRate – are established, specialized microfinance rating agencies with extensive experience, having analyzed hundreds of institutions to date.
“Microfinance emerged in the wake of inability of the formal sector banks to be client-centric and reach the excluded sections of the society. As such, it is important that the focus of micro finance remains on clients. Initiatives like Client Protection Certification ensure that this focus is not diluted,” said Dr. Alok Misra, CEO of M-CRIL, one of the licensed rating agencies.
The 5 institutions certified in India – Ujjivan, Grameen Koota, Equitas, Swadhaar and Cashpor – have long demonstrated a commitment to client protection. Prior to undergoing certification, all institutions were evaluated by the Smart Campaign on their practices, and contributed to the development of Campaign tools to help advance the sector. Over the last two years, the Campaign has been working in India with more than 90 MFIs to help prepare the microfinance industry to improve their practices and ultimately meet the standards of certification.
About the Smart Campaign
The Smart Campaign aims to improve client protection in microfinance through better understanding and use of client protection principles by microfinance institutions (MFIs). Certification of MFIs is one of the primary activities of the Campaign. The Client Protection Certification Program is possible because of partnerships with the MasterCard Foundation, Ford Foundation, the International Finance Corporation, the Multilateral Investment Fund a (member of the IDB group) and microfinance pioneer Accion. It has been shaped through cooperation with dozens of supporting organizations, notably the Smart Campaign’s co-founder, the Consultative Group to Assist the Poor (CGAP).
About the Center for Financial Inclusion at Accion
The Center for Financial Inclusion at Accion (CFI) helps bring about the conditions to achieve full financial inclusion around the world. Constructing a financial inclusion sector that reaches everyone with quality services will require the combined efforts of many actors. CFI contributes to full inclusion by collaborating with sector participants to tackle challenges beyond the scope of any one actor, moving from thought leadership to action.
Accion is a global nonprofit dedicated to creating a financially inclusive world where people have the financial tools they need to improve their lives. We are building the next generation of top-tier microfinance institutions, accelerating start-up companies that serve the poor through our impact-investing initiatives, and helping to create a strong industry with high standards. Over more than 50 years, Accion has helped create 63 microfinance institutions in 32 countries on four continents that today reach millions of clients. For further information, visit www.accion.org.
Deputy Director, Smart Campaign
Center for Financial Inclusion at Accion