Indian NBFCs Microfinance Network MFIN to assess their transparency level, sources

Indian NBFCs Microfinance Network MFIN to assess their transparency level, Monday, February 22, 2010

Microfinance Institutions Network (MFIN), a newly formed body of NBFC-MFIs in India has decided to carry out an in-depth study of the status and level of transparency in its network members and suggest measures to improve the situation, if required, said sources in the industry.

MFIN is planning to conduct the study in association with Microfinance Transparency (MFTransparency), a global initiative by Chuck Waterfield. He had earlier contributed a widely used business planning software for the MFIs and is now focusing on promoting transparency in the sector.

MFTransparency seeks to enable transparent communication between suppliers and consumers of microcredit products and improve communication among other microfinance stakeholders by presenting information on credit products and their prices in a clear and consistent fashion. Its website (www.mftransparency.org) has already taken up the task of disclosing repayment schedules for each product that participating microfinance institutions offer.

In India, MFIN was created as a follow-up of Alpha Micro Finance Consultants Private Ltd., a credit bureau that was formed early this year with around 30 leading NBFC-MFIs. These MFIs account for around 85% of the Indian market. To optimize the benefit for the industry through this engagement with credit bureaus, the NBFC-MFIs have created the MFIN.

With its own Code of Conduct, the network requires member-MFIs to adopt certain processes and be subject to certain limitations that will limit over-lending to a borrower.