Public Relations Policy in MFIs: A "Nice To Have" or Necessity?

MicroSave's Briefing Note No. 131 highlights the increasing importance of public relations (PR) policies and need for a structured approach to handle PR for an MFI. It discusses the microfinance crisis in Andhra Pradesh (AP), India, and stresses that timely implementation of PR campaigns can reduce confusion and create an environment of mutual trust between the public and MFIs. The note states that the lack of an effective public response from MFIs allowed the microfinance crisis in AP to deteriorate, ultimately resulting in mass defaults by clients. Proactive PR policies could have decreased reputation loss in this situation. The note discusses the various objectives of a PR policy based on MicroSave's experience of working in varied geographies with MFIs. Conclusions include:

• PR is set to have increasing influence on strategic decisions at organization level as the financial services market for the low income segment grows and matures;
• Concerted efforts from all stakeholders of financial service providers can lead to appropriate, transparent communication measures, and effective relationship management;
• PR policy can play a game changing, catalytic role in creating loyal customers, quality portfolio, and stronger market reputation.