Smart Lending: Client Protection in the Individual Loan Process
Throughout the credit process there are points at which MFIs can implement client protection practices. This guide is designed to help MFIs with individual lending operations integrate good client protection practices at the intersection points throughout the credit process. At each point in the individual lending process, the guidelines explain how MFI staff should incorporate client protection into policies and operations.The guidelines are largely focused on operational issues, with brief recommendations about setting up policies for the institution.They walk the user through each major step of the individual lending process, organized into five phases:
- Promotion and sales;
- Evaluation;
- Approval;
- Disbursement;
- Collections.
The chart begins with an overview of the entire credit process and then provides greater detail on each of the five phases. At each appropriate step in the process, the guidelines identify where client protection practices can and should be incorporated. Each of those intersections is denoted with a client protection intervention point number (e.g. CP1, CP2 etc.). Guidelines for each CP include suggestions for how to model good practice in consumer protection for that portion of the credit process.While the guidelines offer suggestions for operational steps and policy consideration, they are not a complete solution for implementing client protection in the credit process. They do, however, identify areas where additional steps may be necessary, such as staff training and institution-specific materials for how to address the points raised in the guidelines. Many of the guidelines would benefit from an additional, more in-depth tool to help field staff implement the ideas contained in the guidelines. The Smart Campaign plans to develop several of these in-depth tools.
