MFTransparency launches Transparent Pricing Initiative for Microfinance in India
Identifying Transparent Pricing as the emerging challenge for the microfinance industry world over, MFTransparency.org, a US based non-profit has launched its Transparent Pricing Initiative in India with 5 seminars across the country, in New Delhi, Hyderabad, Kolkata, Bangalore and Chennai during April 12-19, 2010.
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Through the workshops, MFTransparency will share the new industry standard for calculating interest rates for microcredit products. It will also explain how institutions can actively participate in becoming a member of the MFTransparency project. Members will benefit directly from MFTransparency’s Indian Market Data. This workshop will give an opportunity to share experiences with peer institutions as well as learn from the experiences of other institutions in other countries from around the world. MFTransparency has recently conducted similar workshops and data collection efforts in Bosnia, Peru, Cambodia, Bangladesh, Azerbaijan and Kenya. It is scheduled to conduct its project in 24 countries in 2010 throughout Latin America, Africa and Asia.
With an unprecedented growth, industry practitioners have raised concerns about having a credit rating agency, and other ways to protect microfinance consumers and ensure that microfinance is working to alleviate poverty and not exploit the poor. Elizabeth Littlefield, former CEO of CGAP, and nearly 300 industry professionals and organizations have committed to transparent pricing by endorsing MFTransparency and its initiative. In India numerous organizations have endorsed MFTransparency including 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. Mr. Mahajan, President of Microfinance Institutions Network (MFIN) and Chairman of BASIX Group has also been a big supporter of MFtransparency’s initiative in India.
With a vision of a Microfinance industry operating in healthy free market conditions where consumers and other stakeholders can make informed decisions, MFTransparency enables transparent communication between suppliers and consumers of microcredit products. It provides information on credit products and their prices in a comprehensive manner for microfinance stakeholders to work with a full understanding of costs paid by clients. It has also undertaken the role of developing and disseminating educational material to enable stakeholders better understand the concept and function of interest rates and product pricing.
Microfinance has long been highly transparent in some areas, but due to complications of market conditions and lack of regulation, the true price of loan products has never been accurately measured or reported. For this reason MFTransparency believes there is a need to present information on credit products and their prices in a clear and consistent fashion. And at the same time, MFTransparency sees an opportunity to provide education on the considerations microfinance Institutions (MFIs) face regarding interest rates and product pricing. Since MFTransparency’s launch in July 2008, 293 industry leaders, including MFIs and Apex Banks currently serving 81 million clients worldwide, have signed the endorser statement.