Smart Lending: Client Protection in the Grameen-style Group Lending Process (India)

Throughout the credit process there are service points (SPs), meaning points of interaction with the clients at which MFIs can implement good client protection practices. This guide is designed to help MFIs incorporate good client protection practices into their group lending policies and operations. The tool is applicable to Grameen-style group credit methodology and was developed specifically for Indian MFIs. The group lending process is segmented into five key phases:

• Client recruitment and application;
• Compulsory group training and group recognition test;
• Group loan approval;
• Disbursement and customer service;
• Collections and recovery.

Each of these phases is further segmented into distinct SPs. For each one, the tool demonstrates how an MFI can model good practice in client protection in their policies and operations; and identifies which Client Protection Principles are affected. The document provides recommendations for the use of client protection tools that could help MFIs improve client protection practices at each SP.

While the guidelines offer suggestions for operational steps and policy considerations, they are not a complete solution for implementing client protection in the group lending process. However, they do help institutions identify areas where additional steps on their part may be necessary to adequately implement client protection practices.