Progress of the Transparent Pricing Initiative in India
We are excited to announce that 80 microfinance institutions in India have indicated their interest in participating in the Transparent Pricing Initiative in India by submitting product pricing data to MFTransparency. Of these, 65 data submissions have been completed and approved by the senior management of the institution and the remaining 15 are underway. While our official deadline for data submission has now passed, we are still accepting data from MFIs who need a few extra days to complete their submission.
Currently the India team is in the process of cleaning and analyzing the microloan pricing data we’ve been collecting since June. This entails calculating the Annual Percentage Rates (APRs) and Effective Interest Rates (EIRs) for all loan products, checking for inconsistencies and verifying the information we’ve received against the repayment schedules and loan contracts that MFIs have submitted with it. The India team is also receiving training on a new data cleaning tool and procedure that will help us to process the data systematically and further verify its accuracy.
Once this process is complete, each participating MFI will have the opportunity to confirm the accuracy of our calculations. They will also have an opportunity to preview the full India dataset and graph before it is made public in November with the official data launch. This graph will show, in MFTransparency’s unique format, the prices of microfinance products offered in India.
It is our hope that the release of the India data will be timely as industry leaders have recently come together to form a code of conduct in efforts to bring about consensus on responsible practice. Regarding transparency, the code includes disclosing loan terms and conditions to clients and detailing loan sanction letters, among other fair practices to protect clients and their information. Also in recent news, Mr. N. Srinivasan, MFTransparency Board Chair, participated in a roundtable organized by the International Finance Corporation (IFC) on working “Towards Transparent Reporting for Responsible and Inclusive Finance.” In this discussion, the high level of participation in MFTransparency’s Transparent Pricing Initiative in India was highlighted as evidence of Indian MFIs’ willingness to progress toward transparent and responsible pricing.
To complement the quantitative data we are collecting, the India team is also working on producing an analytical report which will underscore the relevance and practical value of the data for all stakeholders including donors, investors, policymakers and practitioners. It is our hope that with the release of this data, which has never been collected in India before, MFTransparency will help to inform the dialogue among stakeholders and policymakers in the Indian microfinance market, particularly to deepen the understanding of microfinance operations and pricing. We also look forward to continued discussions with MFIs relating to the practices that promote consumer protection and bring about a healthier microfinance market.
Please be sure to stay tuned for more updates as we work towards preparing for the data launch.