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Inafi India Voluntary Code of Conduct for Self-Regulation

Introduction

Member Institutions of Inafi India subscribe to poverty reduction for micro finance interventions through a process of enabling approach. Member Institutions promote, build and nurture People Institutions of poor people such as Self-Help Groups, Cooperatives, Producer Companies, etc., and enable access to financial services by connecting with the banking system. For, People Institutions linkage with banking system only could provide affordable financial services in India. In the enabling process the Member Institutions have facilitated the People Institutions for the self-regulation process to manage and advance micro finance activities for growth with order. The Member Institutions have evolved the following guiding principles for the self-regulation practices:

  • Reaching out to the poor for enabling access to financial services
  • Micro Finance as a means to poverty alleviation
  • Building People’s Institutions through enabling process
  • Development outcome to guide financial services
  • Monitoring the development impact of financial services
  • Common methodologies/indicators for financial services
  • Micro finance is not charity nor commercial but a compassionate business

Objectives of the Code

The Code has been developed to:

  • Promote good and fair microfinance practices for the poor
  • Impart and emphasis transparency so that the clients have better understanding of the financial services
  • Encourage Peoples Institutions to achieve higher standards
  • Promote and advance financial partnership and cordial relationship with the banking system in India
  • Foster confidence among the banks on the micro finance programmes of the People Institutions promoted by the Member Institutions

Fair Commitments

Member Institutions agree to:

  • Promote good and fair microfinance practices for the poor
  • Adopt and promote self-regulation practice as a value and help facilitate People Institutions promoted by them to practice self-regulation
  • Enable evolving standards under three parameters: development, institutional and financial for the self-regulation practices
  • Recognize the diversity of the context and evolve context specific standards, focusing on poor and poverty reduction
  • Evolve development standards framework from poverty reduction perspective for their micro finance programmes and also reaching the left out poor
  • Promote and observe high standards of governance as part of ensuring high institutional standards
  • Ensure fit and proper status for members of the Board of Directors of the People Institutions
  • Ensure transparency in the maintenance of the books of accounts and reporting and disclosure of financial statements
  • Facilitate evolving high standards for financial services
  • Enable provision of financial services to poor and low income clients, regardless of gender, race, caste, religion and language
  • Encourage savings first, credit next and insurance is a must approach for a graduated financial services
  • Recognize the responsibility to forge links with banking system for savings and credit facilities based on the need and repayment capacity, interact with the clients in a polite language and dignified manner and spare no efforts in building their confidence for long term relationship
  • Enable People Institutions to discourage and campaign against usurious lending practices in the MF Sector
  • Facilitate financial inclusion process by the People Institutions, promote/advance the Business Facilitators/Business Correspondent models for financial inclusion
  • Promote financial literacy among the clients as a part of micro finance intervention including the benefits of insurance, remittances and pension through banking system and insurance companies
  • Undertake financial counseling for better credit discipline and financial behavior
  • Educate the members of the People Institutions on credit discipline and to eschew multiple loans from different sources to avoid debt-trap

The Member Institutions of Inafi India Network also recognize their responsibility to propagate and advocate the best practices of self-regulation to the sector at large. Capacity building efforts shall be undertaken as part of this responsibility in the sector.