State of the Microcredit Summit Campaign Report 2012
This report evaluates the threats facing the microfinance sector around the world and, especially, the current crisis in South India. After a period of unprecedented growth and competition, dangerous levels of client overindebtedness have resulted, followed by increased credit and reputational risk.
The report explores initiatives addressing these challenges and sets out seven steps as a framework for addressing these. The steps include:
- Practice microfinance safely to ensure that clients are not harmed through appropriate product design and delivery, preventing over-indebtedness, responsible pricing, privacy of client data and addressing complaints;
- Invest in getting to know clients better and encourage savings;
- Promote financial literacy to help clients learn how to make appropriate, responsible financial decisions.
The report concludes that MFIs share in the responsibility for the success and failure of their clients. Besides, other stakeholders have to provide incentives that encourage MFIs to put their clients first. Coordinated efforts can normalize client protection principles, set universal standards for social performance for poverty outreach and transformation.
