Building the Foundation for Understanding Transparent Pricing

28 May 2014

Within the microfinance community, there is a significant gap between our strong desire to understand true prices and our limited technical knowledge about how to calculate true prices.

This training session, developed by the world’s leading pricing expert, introduces the foundations of transparent pricing. It will provide you with the tools you need to demystify transparent pricing. Featuring practical examples, screenshots from the Calculating Transparent Prices Tool and practice exercises, this educational resource provides you with classroom-quality lessons for a solid foundation in the concepts of transparent pricing

This introductory level training session gives an overview of:

  • What pricing means
  • Systematic examples showing how cash flow is fundamental for calculating true price
  • Suggested exercises to cement the learning

How to Develop an Institutional Code of Ethics

06 May 2014

The Smart Campaign’s client protection principle on Fair and Respectful Treatment of Clients encourages financial service providers to treat clients with fairness and respect and to ensure that measures exists to detect and correct corruption and abuse, particularly during the credit sales and collection processes.

An institutional Code of Ethics helps employees practice fair and respectful treatment of clients by defining clear standards of ethical behavior that they must uphold. A written Code does not ensure ethical conduct, but it is the first step toward creating an ethical organizational culture. In other words, establishing high standards of ethical employee behavior is a two-part process; first, the institution defines standards of behavior, and second, those standards are brought to life throughout the institution. This guide will focus on the first part of the process—defining standards of behavior through a formal Code of Ethics.

Most microfinance institutions already have a Code of Ethics, but many of these Codes are not “living” documents that carry significance within the organization. This short guide provides concrete suggestions for creating or remaking an institutional Code of Ethics.

Client Protection Certification Standards

06 May 2014

Client protection certification standards describe where the microfinace industry sets the bar in terms of client protection.  To be Certified, a financial institution (FI) needs to comply with the indicators corresponding to the following 30 adequate standards of care for client protection.

Avoidance of Over-Indebtedness: Guidelines for Financial and Non-Financial Evaluation

06 May 2014

“Avoidance of Over-indebtedness: Guidelines for Financial and Non-financial Evaluation” is a tool for financial service providers that want to incorporate good client protection practices into their evaluation processes for individual loan clients. Specifically, the tool provides guidelines for determining a loan applicant’s capacity and willingness to repay a loan. A careful evaluation process is critical to avoiding client over-indebtedness, the situation in which a client cannot repay a loan without sacrificing his or her quality of life. Financial service providers have a responsibility to actively prevent client over-indebtedness.

Responsible Treatment of Clients: Practicing Non-discrimination

06 May 2014

Financial service providers should treat clients (including potential clients) with honesty, fairness, and respect. Due to their low social status, many low-income clients receive poor treatment when interacting with mainstream business or government organizations. This is not acceptable for pro-client financial service providers.

Financial service providers discriminate when they treat people differently and less favorably because of characteristics that are not related to their ability to meet the requirements of the financial institution. Client selection and treatment should not involve discrimination on the basis of personal characteristics or personal affiliations.

Non-discriminatory treatment is important for providing access to financial services for all clients who can use them and for building client confidence in the fairness of the provider.

Strategic Marketing for MicroFinance Institutions

05 May 2014

Microfinance has demonstrated its potential to assist the poor to make significant strides towards reducing their vulnerability, improving their livelihoods, paying for basic health care and financing their children’s education. Many microfinance Institutions (MFIs) have demonstrated an ability to provide financial services to poor people on a sustainable, profitable basis. Together, these facts have attracted a great deal of donor of money and a wide variety of organisations into the Microfinance sector. As a result, a growing number of markets are becoming extremely competitive and clients have an ever-widening choice of financial service providers to choose from. With the vast majority of MFIs functionally confined to offering short-term credit products, the clients are effectively given the choice of staying with or leaving their current service provider at the end of every loan cycle. In competitive markets they are exercising this choice with unflinching regularity … and many are “deserting” their service provider to try another or simply to take a “rest” from the rigours of MFIs’ terms and conditions. The extensive literature documenting the reasons for and cost to MFIs of high levels of “drop-out”, “exit” or “desertion” has spurred them to re-examine their products and delivery systems to respond better to clients’ needs. Furthermore, the growth in competition between MFIs in many markets has meant that growing numbers of MFIs are responding by seeking to better understand their clients’ demands and preferences and thus taking a market-led approach to their business.The development of a more client-responsive, market-led approach to Microfinance is an important watershed in an industry hitherto largely dominated by the misconception that simple replication of successful models could achieve massive and sustainable scale worldwide. As Hulme notes, “Ironically it is the success of the “first wave” finance for the poor schemes…that is the greatest obstacle to future experimentation”.

Client Satisfaction In Microfinance Program

05 May 2014

CARE Bangladesh through its microfinance project called INCOME III aims to increase access to financial services for the poor in Bangladesh. Improved access allows the poor to save and borrow money to meet their investment and consumptions needs. Access to microfinance has a strong correlation with poverty reduction. The INCOME III project operates in urban and per-urban areas of three big cities viz. Dhaka, Chittagong and Khulna with more than 30 partner MFIs, which provide financial services to the poor.The project builds capacity of these MFIs and provides them with capital to expand their operations. The impact of the project has been positive, reaching more than 250,000 clients. In addition, the project has provided training combined with technical assistance to build the capacity of the partners that include corporate governance, financial accounting, product development, framing business plan development, carrying out participatory institutional assessment and mainstreaming gender issue. As a result of this support, the efficiency of service delivery and financial sustainability of the partner MFI shave significantly increased. Despite all these things, very little could be known from the client side. It occurred to the project management that so far no research or study has been carried out to know the feedback of the clients, their likes and dislikes on the products & services that are being offered to them. There is no denying that the clients are at the focal point of the microfinance program but their reactions have indeed remained largely unknown. In order to enable the MFIs to know what the clients think about the programs, what the MFIs’ role should be in this context, the project management has decided to galvanize the MFIs on the issue by commissioning the study on Client Satisfaction. We believe that client satisfaction is the essence of market competition that will lead to providing quality products and services. The objective of the study was primarily to know the likes and dislikes of the clients using SEEP Tools and gathering institutional experiences of the partner MFIs and other best practices at the national level contributing to client satisfaction.