Introduction to the Indian Microfinance Market and the Transparent Pricing Initiative in India
The Transparent Pricing Initiative in India, a consumer protection effort aimed at promoting transparent pricing in microfinance, launched in April 2010 with back-to-back workshops held in 5 major cities: New Delhi, Kolkata, Hyderabad, Bangalore and Chennai. The workshops were well-attended with participation from all corners of the microfinance industry including donors, investors, MFI practitioners, researchers, local media and officials from government and apex bodies.
Along with the training offered through these workshops, the Transparent Pricing Initiative in India will include the collection and publication of prices for microfinance products offered in the Indian market.
MFTransparency is working in India in partnership with ACCESS Development Services. This partnership is built upon existing synergies, as ACCESS has also been promoting the message of balancing the dual goals of financial sustainability and social responsibility. Last year’s Microfinance India Summit, hosted by ACCESS, was centered on the theme of “Doing Good and Doing well” and this year’s Summit will be sure to continue the dialogue on this important aspect of microfinance. With an alignment of principles, this partnership will strengthen the data collection phase and other activities of the Initiative.
In addition to our implementation partnership, we have received other types of support from many sources. The Transparent Pricing Initiative in India is sponsored by the Citi Foundation, the Michael & Susan Dell Foundation, the Microfinance Institutions Network (MFIN) and Standard Chartered Bank. MFTransparency has been endorsed by 122 individuals in India, including several microfinance leaders in the country such as: R.M. Malla Chair of SIDBI, Amaresh Kumar Executive Director of NABARD, Vikram Akula CEO of SKS, Padmaja Reddy Managing Director of Spandana Sphoorty Financial Limited and Dr. Mohammed Obaidullah Founder and CEO Institute of Microfinance and Development. Please click here for the full list of endorsers in India.
India is the largest microfinance market that MFTransparency has worked in so far. Research indicates that there are an estimated 135 million microfinance clients in India as of March 2008. In addition to its size, the mature market in India is home to numerous innovations in product development and technology for greater financial inclusion. The Indian microfinance sector is also known to have held a strong social mission for decades. As the Initiative progresses, we will come to learn whether this mission is reflected in the industry’s pricing practices.
Transparency and client protection are issues of great importance to MFIs and many stakeholders in India. There have been numerous sector-wide initiatives to build a common understanding and “Code of Conduct” for MFIs to adhere to. Government bodies are also very attentive to the microfinance sector and have been debating a Microfinance Bill in parliament which includes aspects of consumer protection. It is evident that the sector has reached a point at which it is ready to set standards and push the agenda of financial inclusion forward. It is the hope of the Transparent Pricing Initiative in India to add to this momentum by collecting data, sharing information and promoting dialogue among all stakeholders to bring about greater transparency and stronger client protection practices.
We are very excited to have received such a strong response to the Transparent Pricing Initiative in India from MFIs and other industry stakeholders. Continuing the momentum generated from the workshops, to date there are more than 40 complete data submissions from microfinance institutions in India and another 40 that are underway. As the MFTransparency team in India progresses further in the data collection phase, check the India page regularly for updates. Please also stay tuned for more blog posts on emerging trends and findings on transparency in the Indian microfinance sector.