Advocacy and Development
MFIN’s vision of promoting inclusive growth drives our advocacy efforts. Our response to financial exclusion requires us to work for policy change and challenge those which inhibit inclusion. Effective advocacy both immediate issues and the root causes—whether with governments, regulators, institutions, the general public, or all of these. An essential element of advocacy is building a relationship with those whose needs are underrepresented and bringing their interests to the attention of governments, regulators, bankers, investors, businesses, or the general public in ways that address them effectively. As a collective voice of the industry and in our primary role as an SRO of the industry, we have a unique privilege and responsibility to be a voice for those who otherwise may not be heard.
Our engagement with various stakeholders follows a sequential process :
MFIN continued its engagement with key stakeholders of the microfinance industry, specifically with the Reserve Bank of India (RBI), Ministry of Finance (MoF), MUDRA/SIDBI, UIDAI and the Ministry of Urban Development.
The focus of the dialogue with these entities has been to improve the policy and business environment for the microfinance industry in the country, so that it can contribute concretely to the national agenda on financial inclusion.
Another critical piece of MFIN advocacy efforts has been improving the credit information system. For low-income customers, who are otherwise devoid of traditional collaterals, information collateral through credit information report is a big asset to access credit. MFIN in close collaboration with NBFC-MFIs and CICs has steered the building of this critical infrastructure for low-income clients.
For Aadhaar, MFIN has been addressing the issue of enrolment in certain geographies where customers don’t have Aadhaar ID with UIDAI. MFIN is also linking its member MFIs and UIDAI to see how MFIs can use Aadhaar ID for eKYC and demographic authentication and therefore digitalize their loan application process.
MUDRA/SIDBI: The CEO MFIN also is part of various think tanks and discussion forums including the RBI’s Financial Inclusion Advisory Committee, the MUDRA Board, the PSIG Think Tank and the ACCESS Assist Advisory Group.
Advocacy efforts must necessarily be supported by developmental Initiatives that build a well governed, regulated and responsible industry. The development objectives MFIN focuses on are:
- Building an enabling regulatory overall facilitative policy environment for promoting the National Agenda of financial Inclusion
- Understanding demand supply gap in financial services for the clients at the bottom of the pyramid
- Developing new products, products, methodologies and services to serve the bottom of the pyramid
- Developing new partnerships with various actors in the financial services space in the industry
- Developing robust systems that promote best practices in member institutions of MFIN
- Promoting effective and responsible client practices among members
- Ensuring highest standards in the industry in customer protection for the bottom of the pyramid clients
- Information Hub:Knowledge and information based on relevant, accurate and timely data are key drivers for the work that MFIN carries out. Over the years, MFIN has taken a series of steps to contribute to the body of information that guides market practices and supports policy discourses.
- MFIN’s Information Hub provides wide-ranging data and analytics on the microfinance industry to be used by various industry participants including regulators, government, investors/funders, rating agencies, media and academia among others. The Hub has played an instrumental role in bringing greater transparency and accountability to the industry and supporting them with standard benchmarks.
- MFIN published four editions of the Micrometer, which provided quarterly trends on the key operational and financial indicators of the microfinance industry at a pan India and state level.
- MFIN published its inaugural edition of MicroSpread, which provides district level data of member MFIs on key operational indicators such as number of MFIs operating, branches, loan accounts, loan amount outstanding and disbursements. This publication is currently only available to MFIN members and associates.
MFIN has been working on several initiatives that aid the robust development of the sector. Several studies and infrastructure projects have been implemented, and new avenues for improvement and development are being identified and acted upon. Some of these are:
- Credit Bureau:Pre 2010, absence of comprehensive credit information was a key challenge in the development of the sector. MFIN members took the earliest steps in 2010 toward establishing a credit bureau which especially catered to the needs of this industry. MFIN facilitated the establishment of the first Credit Bureau for Microfinance clients (High Mark) aimed at improving credit risk management for MFIs. Other mainstream Credit Bureaus, such as Equifax and Experian now also offer services/products to the microfinance sector. In addition to encouraging a larger number of MFIs to join the Credit Bureau initiative, MFIN monitors the credit bureau compliance across its membership. The credit bureau activities of MFIN aim at: broadening of coverage of the Credit Bureaus, Raising awareness about the credit bureau, and improving the credit bureau data quality.
- MFIN has been closely working with MFIs and the Credit Institution Companies (CICs) to improve the Credit Bureau ecosystem through a series of Credit Bureau standards, diagnostic studies, systems and process guidelines on Credit Bureau systems and processes and monitoring framework. Some of the important initiatives included standardizing the format for input inquiry format (which is used for extracting the Credit Information Report) and developing Data Quality Index (DQI) which helps MFIs in identifying gaps in data quality.
- Human Resources: As part of its mandate to improve the eco-system of the industry, MFIN undertook a number of initiatives in the area of Human Resources such as:
- Workshop of HR Heads
- Compensation and Benefits Study
- National Occupational Standards and Training Module for Field Staff
- Small MFIs: In the last couple of years, while funding to the industry has grown significantly, small MFIs still face challenges in accessing funds (both debt and equity). However, in the emerging landscape (Bandhan converting to Bank, 8 NBFC-MFIs converting to SFBs in next 18 months), for the continued growth of the microfinance industry, it is very critical that the funding eco-system for small MFIs (existing and new ones) improves. In this context, MFIN organized a round-table to examine the funding opportunities/challenges for small MFIs and identify ways to address them.