Microfinance Institutions Network (MFIN) has launched a revised code of conduct for microfinance institutions (MFIs). The salient features of the revised code emphasise more robust standards on corporate governance, measures to reduce client overindebtendess, mandating use of Aadhaar over a period of two years, and strengthening grievance redressal management.
All the changes will focus on the fundamental aspects of responsible business and enhanced client protection. The revised code also includes a supplementary document ‘MFIs Commitment to Customers’ recommended by the working group, to be given to the customers at the time of loan disbursement, said a press statement here.
All microfinance institutions are required to adhere to the core values of microfinance and abide by the Code of Conduct laid down by the government and the regulators. MFIs should work towards the promotion of financial inclusion by providing services to clients belonging to unserved and underserved households, it added.
One of the outcomes has been the formulation of a common Industry Code of Conduct (CoC).
“The microfinance industry had last put together a joint code of conduct in 2011. Since then the industry has gone through several changes with micro regulations specific to industry coming in, new compliance parameters, and both MFIN and Sa Dhan being notified as SROs for NBFC-MFIs by RBI. This has given rise to the second iteration of the joint Code of Conduct and further strengthens the microfinance industry’s commitment to uphold its core principles of client protection and responsible lending,” said Ratna Vishwanathan, CEO, MFIN, in a statement.