To ensure responsible lending in an evolving industry, within the broad framework provided by the RBI Master Directions for NBFC-MFIs, RBI Fair Practices Code, Industry Code of Conduct (CoC), SRO has framed rules, standards and benchmarks for MFIN member NBFC MFIs. Adherence to Industry CoC and MFIN Standards is mandatory for the membership of MFIN, ensuring client protection.
While the Code of Conduct has been in place since years and is revised periodically, it was in 2019 that MFIN, jointly with Sa-Dhan & FIDC, released the Code of Responsible Lending (CRL). Applicable to all providers in the microcredit space, by adopting the CRL, lenders have committed themselves to universally accepted principles of customer protection.
CRL is guided and overseen by a Steering Committee representing various peer groups as well as the Self-regulatory Organization (SROs), MFIN and Sa-Dhan. The Steering Committee is Chaired by Dr. Harun R Khan (Former Deputy Governor, RBI). The adherence to CRL norms by Providers is checked through a Quarterly Adherence Report (QAR) based on independent data from a Credit Bureau. Based on the performance by the Provider on QAR, the Provider is certified as a ‘Responsible Lender’ by the Steering Committee along with an adherence score.
MFIN Toll Free Number 1800-102-1080
Customer Grievance Redressal Mechanism (CGRM) is an important pillar of customer-protection framework providing customer the right and access to resolve her grievances appropriately. While CGRM of lenders is the first port of call for the customers, it is widely acknowledged that recourse to an independent redress process should be available to customers to address complaints that are not efficiently resolved via the financial services provider’s internal dispute resolution mechanisms.
In the context of micro-credit loans provided by NBFC-MFIs, Industry Associations, recognized by the Reserve Bank of India as Self-regulatory Organizations (SRO), play a similar role. The criteria for SRO recognition, among other things, stipulate that an SRO should have a grievance and dispute redressal mechanism for the customers of NBFC-MFIs including a specially appointed Grievance Redressal Nodal Officer.
MFIN’s CGRM is the largest such mechanism by an industry association in the micro-credit sector globally.
After getting recognition as the SRO for NBFC-MFIs in 2014, MFIN started the CGRM in July 2015 through a toll-free number, allowing customers of MFIN-member NBFC-MFIs, an easy-no-cost access to the SRO to seek support in addressing their grievances.
Currently, the MFIN’s Toll free no is 1800 102 1080.
In the last five years, MFIN CGRM has evolved considerably and currently it is an efficient and effective channel for the customers to register grievances in 12 languages: English, Hindi, Odia, Bengali, Marathi, Punjabi, Assamese, Gujarati, Malayalam, Kannada, Telugu, and Tamil. With a steady growth over the years, 1.93 lakh calls were received in the last financial year.
Over time, CGRM has been leveraged to:
- Use data for customer complaints to understand systemic lapses and issues around products, processes and geographies and take steps to address them.
- Create awareness amongst customers about customer-protection issues in micro-credit by supporting them in resolving their queries.
- Undertake surveys to gather topical insights about issues/challenges/concerns of the customers.
Financial literacy is crucial to financial inclusion and plays a critical role in client protection as it provides information, understanding and knowledge to the client to make informed financial decisions. MFIN has undertaken several initiatives including creating collateral to educate the clients about the credit bureaus and how it impacts their ability to access credit from formal financial institutions.
RBI had entrusted MFIN to conduct 2250 workshops to educate the depositors on the various financial aspects of banking under the aegis of its Depositor Education and Awareness (DEA) Fund Cell. The project comprised three phases (i) Pilot, (ii) Training of Trainers (ToTs) and (iii) Delivery of workshops in selected districts by various partner MFIs of MFIN. The pilot activity and ToTs at eight different locations have been conducted where 230 trainers of 41 MFIs were trained as master trainers.