Certification All About Certification Information for Investors

Information for Investors

Dialogue on Business Clients - India SlimCertification contributes to a stronger, more stable microfinance industry by encouraging practices that can help reduce client over-indebtedness and financial instability.

Certification is an independent, third-party evaluation to publicly recognize financial institutions that meet adequate standards of care in how they treat clients. Certification enables financial institutions to demonstrate adherence to the microfinance industry’s Client Protection Principles. Certification aspires to set a common standard for how client protection is measured across the industry.

To date, 61 financial institutions – including some of the world’s largest MFIs – have achieved certification; collectively, they serve more than 25 million low-income clients.

Certification is not a recommendation of whether to invest in a particular financial institution – its scope is limited to assessing whether the institution adheres to the Client Protection Principles (CPPs).  But certification can help to inform a decision on which institutions may warrant investment, distinguishing those that put clients first.  It can help investors by providing critical and pioneering due diligence.  And the more that certification is prioritized as an investment requirement, the more incentive there is for institutions to undergo certification.

A certified institution meets adequate standards of client care collaboratively developed by over 40 industry stakeholders through a fully transparent, consensus-building and field-based process.

Retail financial institutions that provide services to the lower segments of the market and/or financially excluded populations are eligible for Smart Certification. These include institutions of any legal form, such as banks, finance companies, NGOs, and credit unions.

The value of certification is far greater than its cost, and making investments contingent on certification insures that those investments support adequate standards of client protection.

Certification can help investors and other actors distinguish financial institutions that put clients first. By setting a bar on client protection, certification measures institutions against an industry-wide standard. By investing in certified institutions (that meet its other investment criteria), an investment fund can send a strong signal that it is taking client protection seriously.

Investors are in a unique position to incentivize financial institutions to embrace the Client Protection Principles.  There are many ways investors can help ensure adoption of the CPPs by encouraging or requiring certification by their investees. Please contact Alexandra Rizzi ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ), Deputy Director of the Smart Campaign, to talk about how you can help.

Smart Toolkits for Investors:

Due Diligence Checklist for Investors

This Checklist for Investors is the product of collaboration between CGAP, The Smart Campaign, and many investors. It draws on investor practice and experience. This checklist is not designed as a standalone due diligence tool. Instead, it is designed to lower transaction costs by presenting questions to add to common due diligence topics.
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Implementing the Client Protection Principles: A Technical Guide for Investors, 2nd Edition

This guide provides an updated set of action steps for investors, including a new due diligence tool that provides practical guidance and tips on how to assess implementation of client protection practices by retail providers. This guide also reflects on the main operational questions investors are facing, such as how to assess over-indebtedness and transparent and responsible pricing, and emerging responses.
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Investor/Donor Planning Guide for Implementing Client Protection Initiatives

Investors and donors can use this short worksheet to plan for the integration of client protection into their due diligence processes and their funding strategies. The worksheet first guides the user through the process of assessing current resources and priorities, to take stock of where client protection efforts may best fit within current workflows.
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Smart Campaign Tools Training

The Smart Campaign has developed dozens of tools to assist microfinance institutions (MFIs), investors, and networks/associations in the implementation of client protection. This PowerPoint training introduces participants to the client protection tools available from the Smart Campaign.
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