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Set-up and Instructions

1. Select language for the report


Language

English

2. Input the MFI name and country


MFI
Country

ABC
Country name

3. Select years for financial and portfolio data

End of years

Year 1
Year 2
Year 3
31-Dec-10
31-Dec-11
31-Dec-12

Guidance_versio
n1.0
This guidance is a
work in progress
Assessment and will be
updated regularly.
Please check with
V1.0 Standard
the Smart
Campaign prior to
doing an
Client Protection Principle 1: Appropriate Product Design
assessmentV1.0
to
#
1 - - and Delivery
ensure you have
1 1 - The FI designs products that are appropriate to client needs the most recent
dodesigns
no harm
version of the
1 1 1 and
The FI
products that are appropriate to client needs and
[credit]
guidance.
do no harm. It does not offer products that produce negative
Installments are
1 1 2 The
FI
has
a
policy
describing
acceptable
pledges
of
collateral;
Indicates a list of
value for the clients.
designed in such
Has clear guidelines for how collateral is registered and valued.
assets that

2-

3-

2-

1-

2-

3-

The FI seeks client feedback for product design and delivery a way that
cannot be
clients
The FI investigates reasons for clients drop out.
FI may always
collect
accepted
as
reimburse
a
data
on
client
collateral,
orbe
that
The FI uses client feedback to inform product development and
The
FI must
portion
of
capital
drop
outs
cannot
improve existing products (client feedback can be informal).
able
to be seized
with
each
The FI does not use aggressive sales techniques
through
in
case
of
demonstrate
installment
inthat
formalized
default,
because
The FI does not use high pressure/ aggressive sales techniques.
Excessively
high
feedback
is
order
to
Client
Protection
Principle
Prevention
of Overmechanisms
like
they
would
Does not
force clients
to sign2:
contracts
(for credit,
no forced
sales
targets
forto
communicated
gradually
reduce
indebtedness
a
survey,
an
exit
signing of any individual borrower or group member, or any
deprive
bonuses
may
management
their
debtor
(even
interview
guarantor).
borrowers
ofhas
The
FI conducts appropriate client repayment capacity
encourage
and
show
it
in
the case
of
phone
call,
or
their
basic
analysis
before
disbursing
a loan
aggressive
made
changes to
The FI policies
support
good repayment
capacity analysis. The
rescheduling).
[individual
more
informally
survival
capacity,
selling.
products
or
loan approval does not rely solely on guarantees (whether peer
[savings]
Does
lending]
through
client
The
FI's
repayment
capacity
policy
is
adequately
disseminated
including
Clear,
written
Aggressive
guarantees, co-signers or collateral) as a substitute for good
services
based
not
have
high

Appropriate
among
staff,
considering the staff growth and turn-over.
discussions.
business
assets;
guidelines
on
the
capacity
analysis.
techniques
may
on
the
feedback.
The
FI's repayment
capacity policy is uniformly used in the
fees
that
deplete
methodologies
to
Regardless
of
the
The
fees
related
procedure
to
[individual lending] Repayment capacity analysis is done for
include
requiring
practice.
the
savings.
collect
The
FI loan.
performs a repayment capacity analysis at each loan cycle, Some
system
used,
it is
FIs
may
to
the
collateral
assess
every
all
groups
Feedback
may
[insurance]
information
and
even
if lending]
simplified
forgroup
secondary
aspects
atloan
loanapproval
renewal.process
essential
that
have
a
more
[group
The
formation
and
sales
are
clearly
repayment
to
For clients with informal revenues and/or non consumption loans members
be collected
The
analytical
Insurance
assess
client
ensure
the prudent
self-selection
of members,
emphasis
be
simplified
explained
to the
capacity.
This
(most cases),
the repayment
capacity
analysis with
is based
on a on reasons
renew
a
loan
formally,
through
process
for
coverage
is a
not
repayment
the
concept
of solidarity
The
FIvisit
incentivizes
quality
recorded
in
analysis
for
very
client
before
the
may
include
client
(performed
bypayment.
the loans
loan officer or delegated to the
(with
no
option
include
customer
assessing
debt
excessive
(i.e.,
capacity
are
centralized
small
loans,
sale,
are
within

how
to
conduct
group/village
members).
The
FI
verifies
the
information
Regular reports on PAR and write-offs are produced and reviewed Portfolio
for
one
ofat
the
Risk:
satisfaction
capacity
should
"not
useful
for
register
and
short
cycle
loans
consistency
through cross-checks. For clients with a salary asking available.
normal
ranges
the
client
visit
by the FI's management.
members
to
opt
full
outstanding
surveys,
include
a
the
client",

The
cash
flow
Reasonable
portfolio
quality
is maintained
time. If there is
Reasonable
for
a consumption
loan,
a client
visit is not over
required.
analyzed.
(2-3
months),
or
compared
to

how
to
collect
out).
amount
of
loans
telephone
requirement
for
especially
in
poor long term quality of loan portfolio, and linked to overanalysis
formats
portfolio
quality
different
loan
peers,
and
the
evaluate
The
FI's productivity
targets
and incentive
systems
portfolio and
Examples
of
past
due;
PAR30
hotlines,
focus
confirming
indebtedness,
corrective
measures
have been
put invalue
place.
cases
of analysis
and
the
is
define
as
products
like
difference
quality at least as highly as other factors, such as disbursement
non-financial
formulas
that
refers
to the
groups,
information
compulsory
The
FI's productivity
targets and incentive schemes are
performed
intotal
Industry
PAR30
+ write
off
or client
growth.
emergency
between
the
data
(ex.:
value
portfolio
outstanding
of
suggestion
provided
by a
reasonable as compared to the industry benchmark (parameters benchmarks
products).
practice
consider
for
>
360
<
10%
loans;
this
is
fine
value
of
the
If
PAR
is over 10%
at the level ofremuneration).
the MFI, bonuses are offered to quality
character,
asand
highly
loans
past
due
boxes;
or
and
proportion
of fixed/variable
potential
client,
business
productivity
(including
loan officers able to decrease PAR below 10%.
as
long
as
asset
and
the
management
as
other
factors:
by
30
days
or
informally,
in
such
as
The FI uses credit bureau and competitor data, as feasible include
family
expenses
restructured
essential
outstanding
capacity,
family
meeting
client
more.
It
is
a
discussion
with
reference
checks
in
localbureau]
context
as
well as
borrowers
per
portfolio)
for
the
[credit
The FI policies include clear consultation and
analysis
isof
done
balance
is
situation)
growth
targets
measure
clients,
during
and
site
visits.
liabilities
from
loan
officer
(total
past
24tomonths
sharing of client data (for all loan cycles).
(business
and
reasonable.

how
collect
(30%),
meeting
portfolio
quality.
group
or
center
This
information
other
sources.
outstanding
(on
average,
household
Basic
survival
and
evaluate
portfolio
growth
Write-off:
meetings,
during
can
be
useful
for

The
loan
number
of
monthly).
income/expenses
capacity
refers
financial
data to

Score

Indicator

Standard

Principle

Input

Summary of opinion

?
?

?
?

?
?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
[List the key results of the
+
(for strengths)
analysis,
citing the evidence.
o
(for
areas
of as
improvement)
Try to regroup
feasible
Strengths and Areas of
Improvement].
[List the key results of the
+
(for strengths)
analysis,
citing the evidence.
o
(for
of as
improvement)
Try
to areas
regroup
feasible
Strengths and Areas of
Improvement].
[List the key results of the
+
(for strengths)
analysis,
citing the evidence.
o
(for
of as
improvement)
Try
to areas
regroup
feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

?
?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].

2
2
2
2
2

2
2
2

2
2
2
2

2
2
2
2

2 [credit bureau] The FI systematically reviews client data from the


credit bureau (for borrower current debt levels and repayment
3 3 [credit
[group
lending]
Groups access
to prior
up-to-date
data
history)bureau]
to assess
the client
repayment
capacity
to
from
the
credit
bureau
regarding
borrower
credit
history:
group
disbursement
at each
loaninclude
cycle. The
FI consultation
also systematically
3 4 [no
credit are
bureau]
Policies
clear
and sharing
members
provided
with
the bureau.
credit
bureau credit checks
done
reports
client
data
toloan
the
credit
of
client
data
(for
all
cycles),
with
competitors,
as
feasible in
on other
members.
3 5 [no
credit
bureau]
The
FI
regularly
consults
with
and
reports
client
local context.
data to competitors (informal data exchanges consistent with
3 6 The
has a supervisory
system
in place
to ensure that the credit
legalFIlimitations),
as feasible
in local
context.
bureau or competitor data is effectively used to inform credit
4 - The
FI Management
analysis
and decisions.and Board is aware of and concerned
about
the
risk of over-indebtedness
4 1 The FI's management
and Board of Directors show awareness and
concern about the risk of client over-indebtedness, and monitor it.
4 2 In high risk markets, stronger efforts are required. Management
and Board of Directors define what is high-risk. They review
5 - The
FI's market
internallevel
audit
department
monitors
policies
relevant
information
(relevant
to thethat
current
or to
prevent
over-indebtedness
are
applied
planned
operational
area
of the
financial
institution).
5 1 The
FI's internal
audit
and/or
internal
controls
department verifies
the compliance with the policies and systems to prevent the risk
5 2 The
FI's internal
audit and/or other departments (except for credit
of client
over-indebtedness.
and/or collections departments) visit a representative sample of
5 3 The
FI'seach
MIS regularly
provides information on rescheduled loans.
clients
year.

With regard to
potential
When there is no
invasion of
credit bureau or
privacy issues:
when MFI/coops
Members
Anyprohibited
kind ofcredit
are
history
control
process
from accessing
information
may
that
verifies
it,
MFIs
should
be
conveyed
Examples
ofwith
compliance
strive to share
orally
by
the
showing
policies;
be
data
withmay
Examples
of high
group
leader
or
awareness
internal
audit
or
competitors,
as
risk
factors
loan
officer;
it isa
include
having
control,
or
a
feasible
in
local
include:
multiple
not
necessary
definition
of
specific
control
context.
Verifies
the lack
borrowings,
that
group
oversystem
Field
staff may
compliance
with
of
effective
credit
members
receive
Client
visits
are
indebtedness
in
conducted
before
share
and
the
policies
and
bureau,
high
documentation
used
to
verify
its
context;
or
after
loan
consult
The
MISclient
has
systems
to a
growth,
high
on
the
credit
the
compliance
discussing
overdisbursement.
data
by
calling
specific
field
or
prevent
the
risk
penetration
6 - The FI avoids dangerous commercial practices
bureau
checks.
with
the
policies
indebtedness
competitors
to
process
that
of
client
overrates,
high
Group
members
and
mitigate
the
during
Board
6 1 [group lending] The FI has a policy that avoids parallel loans
Parallel
loansor
exchange
allows
to
indebtedness:
competition,
do
not
risk
of
client
within the MFI (i.e., combining loan products to meet the same
Meetings;
having
refer
to
a loan
information
on of
differentiate
client
repayment
growth
models
6 2 [group
lending]
Thethe
FI has
prudent
to
necessarily
need
overneed, or
restricting
loan
use). limits to allow for the renewal Refers
Senior
that
is
clients,
relying
rescheduled
capacity
and
of a loan in case of early repayment.
geographic
to
receive/take
indebtedness.
6 3 The FI has specific procedures to actively work out solutions (i.e., qualitative
Management
and

procedures
contracted
in list
on
anexposure
informal
loans
from
other
debt
expansive
vs.
for
home
detailed
Sampling
should
through workout plan) for rescheduling loans/ refinancing/ writing procedures
the
Board
cases
of
specific
addition
to
oneIf
network
of
staff
loans;
it should
(including
the
concentration.
automatic
loan
credit
history
off on an exceptional basis for late clients who have the
be
based
on
involved
in
the
distress
under
or
several
other
in
surrounding
be
distinct
from
existence
of
competition,
renewals
or
willingness to repay but not capacity to repay, prior to seizing high
data
on
fellow
areas
of
risk,
monitoring
which
clients
loans
that
arecan
MFIs.
May
the
loan
cycle
multiple
credit
approval
assets.
increases.
The
FI
members;
a high
such
as
a
new
process.
Regular
be
granted
still
outstanding;
include
a should
field,
and
borrowings),
use
policy
explicitly
should
have
level
check
ofor
branch,
a loan
review
and
rescheduling
differs
a the
gentlemans
allow
tofrom
filter
of
credit
bureau
address
borrower
procedures
in
whether
they
offices
analysis
of
refinancing
loan
renewal
by
agreement
with
whole
portfolio
and
competitor
debt
thresholds
place
to
ensure
pass
or
fail
a
delinquent
portfolio
quality
(death
of
this
unique
fact
competitors,
or a
by
only
data,
and
acceptable
that
clients
are
credit
bureau
portfolio,
loans
is
essential,
but
relative;
natural
of
having
some
formal
rescheduled
rescheduling/refi
levels
debt
not
repaying
check
is
over
a of
certain
not
sufficient.
disaster
leading
outstanding
debt
agreement
to
loans.
nancing
from
other
loans
early
(with
sufficient.
amount,
ormore
The
FI
should
to
destruction
of
on
one
or
share
delinquent
Loans
that
have
agreements,
sources.
Policy
money
borrowed
simply
areas
of is
also
be
able
to
asset
or
other
loans.
clients
lists
every
been
to
productivity
adequately
from
amodified
concern.
The
review
products
production
tool;
month.
arrange
a
new
targets
and
disseminated
moneylender,
greater
the
and
practices
iffor
sickness;
etc.);
repayment
incentives,
and
among
staff,
example),
in
sample
size, the
the
context

rescheduling
or
Gentlemen's
schedule,
either
other
practices
considering
the
order
to
take
athe
more
reliable
shows
risks
of
refinancing
can
agreement
refers
lengthen
or and
that
could
staff
growth
larger
loan.
findings
andThis
overalso
to anbe
informal
postpone
the
increase
client
turn-over,
and
practice
conclusions,
indebtedness.
considered
ifbut
arrangement
or
originally
indebtedness.
uniformly
used
effectively
refers
the
greater
the in
clients
have
understanding
scheduled
practice.
to
bicycling
orare
cost.
there
demonstrated
basedIfon
trust
installments,
juggling problems
loansor
specific
good
history
of
that
is
not
legally
to
substantially
(i.e.
use one
loan
to
follow
up,
or
a
repayment
and
binding.
alter
the
original
to
pay
off
Branch
has
request
a This
loan terms.

?
?
?
?

?
?

?
?
?

?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
[List the key results of the
+
(for strengths)
analysis,
citing the evidence.
o
(for
of as
improvement)
Try to areas
regroup
feasible
Strengths and Areas of
Improvement].
+ (for strengths)
[List
keyof
results
of the
o (forthe
areas
improvement)
analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

3-

Client Protection Principle 3: Transparency

The FI fully discloses cost and non-cost information

1-

1 The FI fully discloses to the clients all prices, installments, terms


and conditions of all financial products, including all charges and
1 [credit]
fees, associated prices, penalties, linked products, 3rd party fees,
whether those can change over time.
1 and
[savings]

1 [insurance]

1 [payments]

2-

2 The FI clearly presents to clients the total amount that the client
pays for the product, regardless of local regulations (including in
3 The
FI participates
in the MFTransparency
project (or similar
the absence
of industry-wide
requirements).
industry project, if applicable).

3-

4-

5-

4-

The FI communicates proactively with clients in a way that


caneffective
easily understand
1 clients
The FI has
communication. Staff communicates in such a
manner that clients can understand the terms of the contract,
2 The
contracts
contain simple
language
and no fine
theirFIrights
and obligations.
Staff
communicates
with print
techniques
(figuratively
or
literally).
A
clear
facts
summary
page
is given
if
that FI
address
literacy
limitations
(e.g., materials
available
in local
3 The
avoids
using
pricing
mechanisms
that
create
confusion
on
the
legally
necessary
contract
is
deemed
too
technical
for
the
languages).
the
total costs.
clients.

The FI uses a variety of disclosure mechanisms

1 The FI uses at least two different communication channels for


disclosing clear and accurate information about the product:
2 The
FI discloses
pricing
information
in public
domain.
written
and verbal
(to address
literacy
limitations).

The FI leaves adequate time for client review and discloses


times
1 at
Themultiple
FI communicates
all information related to the product
(terms, conditions, etc.) to clients before signing.
2 The FI gives clients adequate time to review the terms and
conditions of the product, ask questions and receive additional
3 The
FI staff is
available
to answer
questions.
information
prior
to signing
contracts.

The FI provides accurate and timely account information


1 The FI gives clients a hard copy of all documents signed by clients
(including, but not limited to the contract) with all terms and
2 [group
lending]
Each
clientthat
receives
contract,
and/or
anin all
conditions.
The FI
ensures
thereaare
no blank
terms
individual
pass/book
or
payment
book
with
contact
terms
signed
by clients
(including,
but not limited
to,and
3 documents
The
FI regularly
gives
clients
clear
and accurate
information
signature
(even
if
the
contract
is
between
the
group
and
the
contracts)
they
must be(e.g.,
completely
out.
regarding
their
accounts
accountfilled
statements,
receipts,
financial
institution).
4 The
FI provides
clients
updatedfor
balances
balance
inquiries,
proofwith
of payment
loans). on request.

1-

2-

Client Protection Principle 4: Responsible Pricing


The FI offers market-based, non-discriminatory pricing
1 The FI offers market-based, non-discriminatory pricing.

The FIs efficiency is in line with its peers


1 The FI has efficiency ratios aligned with peers.

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

?
The spirit of the
indicator
is that
[credit] Loan
?
prior
to
sale
the
contracts show
an
[savings]
Savings
?
clients
receive:
amortization
documentation
a)
a full that
schedule
[insurance]
?
lists
eligibilityof all
breakdown
separates
Insurance
product
criteria,
interest
[payments]
?
principal,
interest,
costs (even
if
documentation
rates,
fees
for
Payment
fees;
define the
breakdown
is for
lists
eligibility
?
At
the
minimum,
withdrawal,
documentation
amount,
number
criteria;
cost
and
the should
entire loan
FIs
withdrawal
limits,
lists
the
amount
to that
and
due
dates
of
? analyzed interest rates using standardized formulae in
Industry
initiative
how
premiums
are
and
notby
at
minimum
and
present
the
total
be
paid
the
installment
collected;
specific
payment
level)
maximum
- [List the key results of the
cost
ofcovered
the
sender
in
the
payments
and by
events
b)
balances
an
and
use
senders
currency
product
for
the
include
fees
and
product
and
? analysis, citing the evidence.
of
savings
in
case
amortization
and
the
amount
to
Try to regroup as feasible
product
term,
so
conditions
for
early
amount
of
loss (if
of
credit
default
be
received
in
the
schedule
that
?
Refers
to
Strengths and Areas of
repayment,
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o (forthe
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review,
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issale,
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including
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an
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cash
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phone
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both
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of
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group
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out
cashconcept
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builds
clients
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branch
the
of
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itself
product.
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clients).
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at
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other
does
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should
date
sessions/meeting
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reduces
least
one
person
group
members
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breakdown,
include:
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s
Index
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costs
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in
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but
clients
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? analysis, citing the evidence.
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based
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clearly
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the key
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prior
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ethnicity,
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3-

5
5
5
5
5

The FI does not charge excessive fees


1 The FI's pre-payment penalties, account closure fees, transaction
fees or other penalties are not excessive.

Pre-payment
penalties,
- - Client Protection Principle 5: Fair and Respectful Treatment ofaccount
Clients closure
1 - The FI culture raises awareness and concern about fair and fees, transaction
ofaclients
fees
or other
1 1 responsible
The FI clearlytreatment
spells out in
Code of Conduct (i.e., in Code of
The term
Code of
penalties
wouldto
Conduct, Code of Ethics, Book of Staff Rules) the organizational
Conduct
refers
1 2 The
FI's
Code
of
Conduct
has
been
reviewed
and
approved
by
the
not
prevent
a
values and standards of professional conduct that are expected of any document
Board.
all staff.
customer
1 3 The
FI's staff signs a document by which they acknowledge that
Staff
signsfrom
a
that specifies
changing
to
they will abide to the standards of professional conduct and not
document
by
organization
engage in the prohibited behaviors mentioned in the Code of
another
provider.
which
valuesthey
and
Conduct.
acknowledge
standards of

In the
that
theycase
will of
professional
credit,
they
abide
to the
conduct.
A do
not
unreasonably
standards
of
sector-level
compound
debt.
professional
code, if

Pre-payment
conduct
andand
not
understood
penalties
are
engage
in
the
applied at
FI
commensurate
prohibited
level, is valid.
with
the cost of
behaviors
The different
account
mentioned
the
elementsclosure,
ofinthe
and do
not
Code
of
Conduct.
as
exceed
thein this
described
interest
principleamount
may be
of
remaining
loan
grouped
under
term,
plus
one single
operating
document,costs
or
for
mayaccount
appear in
closure.
different

Account
operational
closure
is
manuals.
allowed
without
The following
charging
behaviorsinterest
are
for
full loan term.
always
prohibited (at a
minimum):
use abusive
language;
use physical
force;
limit physical
freedom;
shout at the
client, enter in

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?
?

[List the key results of the


analysis, citing the evidence.
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Improvement].
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2-

The FI has defined in specific detail what it considers to be


practices
1 appropriate
The FI clearlydebt
spellscollection
out in a Code
of Conduct (i.e., in Code of

3-

4-

5-

6-

7-

6-

1-

Refers to
detailed
A zero tolerance
description of
policy is a red
Unless
debt collections
flag that calls for
authorized
by a
practices: what
a careful look at
legal
order,
is acceptable
collections

recruitment
seizure
should
(e.g.
visiting
the
practices.
The
procedures
only
occur
after
clients business
expectation
and
include
a client
receiving
during the
incentive
to
background
consent.
clients working
maintain
a
PAR1
check
staff
Collateral
should
hours) on
and
what
of
0%
can
create
that
focuses
not
be
sold
toon
is unacceptable
pressure
on loan
Annual
identifying
staff
of
the
(e.g., calling the
officers
or and/
evaluations
potential
financial
client after 8pm),
collections
staff
or
previous
institution
or to
theincentive
steps to
and
thusfor
Depending
scheme
staff,
instances
ofon
their
or
followrelatives,
in the
case
increase
the
risk
size,
may
require
and
especially
of
misconduct;
third
parties
of default. The
of
unethical
different
levels
those
inthat
direct

recruitment
involved
in the of
actions
Cases
of
behavior
in
formalized
contact
with
occurs
seizing
process.
should without
not
be
sanctions
can
be
collections.
A FI
information
clients,
prejudice
based
Minimum
income
If
the value
of
taken
orpenalizes
the
verified
based
on
can
avoid
this by
channels.
unethical
on
ethnicity,
necessary
for a
the
collateral
behaviors
that
rules.
In selection and treatment of clients, the FI does not
a
list
of
having
clear
behavior
and
gender,
worker
tothe
meet to
exceeds
are considered
discriminate
inappropriately against
dismissals
policies
on and
what
unprofessional
The FI has a non-discrimination
policy. certain categories of
disability,
basic
needs,
debt,
violatethe
the
clients
review
of
staff
is
acceptable
or
conduct
and
political
at
the
remaining
borrower's
rights.
The FI's rescheduling policies are applied in a consistent and fair defined
files.
unacceptable,
rewards
the
affiliation,
sexual
minimum
as
amount
is
given
[group lending]:
way across the financial institution.
strong
training,
quality
of
In-house and 3rd party collections staff are expected to
orientation,
or
housing,
clothing
back
to
the
The procedures
internal
control
interaction
with
follow
the
same
practices
as
the
FI
staff
religion,
among
and
client.
also nutrition.
describe
The same training is provided to third party collections staff in
and
audit The
customers.
others;
Differs
case collection is subcontracted and they are held to the same
actionsfrom
that the
procedures
to
The
FI informs
FI
avoids
putting

initial
training
standards
as theclients
FI staff.of their rights
minimum
wage
group
members
make
sure
staff
it
in
a
situation
includes
a review
lowest
The FI informs clients of the main aspects of the Code of Conduct. (the
are expected
to
Example:
behave
ethically.
where
its
of
the
Code
Information includes clients right to complain and how to submit remuneration
take andposters,
areof
through
[group
lending] The FI informs clients about procedures about
interests
conflict
a complaint.
Conduct
and
a
that
employers
prohibited
from
or
during
the
collateral seizing.
with
those
of
discussion
with
The FI documents and communicates to clients loan policies and disbursement
may
pay
This legally
indicator
is
taking.
clients
(moral
procedures for rescheduling credit.
new
staff
on
the
to
workers)
in
verified
by
sessions if most
Client Protection Principle 6: Privacy of Client Data
hazard)
(i.e.,
situations
where
that
theare
latter
having
certain
clients
not is
incentives
the
compliance
The FI has a privacy policy and appropriate technology
set by lawinand
language
the
literate.
schemes
are
not
with
the
Code
systems
can
fail
to
meet
loan
contract
or
The FI has a written privacy policy that governs the gathering,
based
on
short
might
be
a
the
requirements
on
some
other
processing, use, distribution and storage of client information.
delays
PAR
The
privacy
clause
is in
plain
language
andleave
not hidden
in
A
sentence
in the
challenge.
of
a living
form
offor wage
The FI's
policy
covers
current
staff
and
those who
the
legalese
or
contract.
The
privacy
clause
stands
out
and
is
not
in
recovery).
The
product
contract
(Wikipedia
organization
information
leakage.
communication
The
Staffand
Book
of Rules and/or
Code of Conduct penalize
May
include
smallFI's
print.
impact
PAR
that
specifies
definition).
To
with
theof
client
misuse or misappropriation of client data.
identity
theft
The FI has penalties for exposing or revealing client data to third how
levels
on
bonus
data
will
be
evaluate
whether
where
(stealing
a
parties without prior client consent.
level
is
gradual.
used
and meets
the
salary
appropriate,
such
clients
Conduct, Code of Ethics, Book of Staff Rules) the specific
The
FI does
endorse aconduct
policy ofthat
zeroare
tolerance
forofPAR.
standards
ofnot
professional
expected
all staff
involved
in collection
(including
third party
staff).
The
FI's policy
guarantees
that clients
receive
a fair price for any
confiscated assets; Has procedures to ensure that collateral
The
FI'sisHR
policiesof(recruitment,
aligned of the
seizing
respectful
clients' rights; training)
Offers an are
explanation
around
fair
and
responsible
treatment
of
clients
role
of staff
guarantors.
In case
kept
in the
The FI
is recruited
and collateral
trained inisline
with
the financial
Code of Ethics.
institution premises, procedures are in place to ensure its
The
FI staff is trained in line with the Code of Ethics: initial
security.
training includes a review of the Code of Conduct and a
The
FI's collection
practices
during
the
initial
training
discussion
with new
staff on are
the covered
situations
where
the
compliance
of
all
staff
involved
in
collections
(loan
officers,
collections
staff,
with
theimplements
Code might be
a challenge.
The
FI
policies
to promote
ethicsstaff
andreceives
prevent
and branch
managers).
In particular,
collections
fraud
training
in acceptable
debt collections
practices
and loan
The
FI managers
and supervisors
review
ethical behavior,
recovery procedures.
professional
conduct and the quality of interaction with customers
The
FI'sof
procedures
describeevaluations.
the sanctions that will be taken in
as part
staff performance
case of violation of the Code of Conduct or collections policies
The
FI staff is discrimination,
informed of penalties
for non-compliance
with
Code
(harassment,
theft, corruption,
kickbacks,
etc.),
of
Conduct
or
collections
policies.
that can
result in termination
There
is sufficient
monitoring of
of employment.
the practices (by operations
department, internal audits), to provide education or sanctions as
The
FI sanctions cases of violations of the Code of Conduct or
necessary.
collections policies (identified by management, internal audit or
The
loan
base pay
is at least
a living wage.
thanks
toofficer
an efficient
complaint
mechanism)
according to the set

?
?
?

?
?
?

?
?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
[List
keyof
results
of the
o (forthe
areas
improvement)
analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
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keyof
results
of the
o (forthe
areas
improvement)
analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

?
?

?
?

?
?
?

?
?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
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+
(for strengths)
analysis,
citing the evidence.
o
(for
of as
improvement)
Try to areas
regroup
feasible
[List the key
results
Strengths
and
Areasof
ofthe
analysis,
citing
the
evidence.
Improvement].
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to regroup
as feasible
+ (for
strengths)
Strengths
and
Areas of
o (for areas
of improvement)
Improvement].
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o (for areas of improvement)
[List the key results of the
analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
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6
6
6

6
6
6
6
6
6
6
6
6
6

5 The FI's has systems in place (including secure IT systems) to


protect the confidentially, security, accuracy and integrity of
1 6 The
FI's IT systems
place
have different
password protection
customers
personalinand
financial
information.
systems that are changed periodically with different access levels
1 7 If
files are to
stored
in physical
format,
FI stores
the client
in
according
the position
of the
staff the
member
accessing
thefiles
data.
a secure location, within the branch or headquarters that has 1)
2 - The
FI informs
when
and how
data
is
restricted
accessclients
only toabout
selected
persons;
2) is their
kept in
a facility
and
gets their
consent
secure
from
or
theft.
2 1 shared
The FI has
a arson
policy
(included
in the training manual) to describe
how to talk to clients about this topic. Requires that the FI
2 2 The
FI communicates
wellhow
the itprivacy
policy
to staff.
present
clearly to clients
will use
and share
their client
data.FI trains its staff to protect the confidentially, security,
2 3 The
accuracy and integrity of customers personal and financial
2 4 The
FI informs customers how their information will be used
information.
internally and, when applicable, when it will be shared externally.
2 5 Prior to loan disbursement, the FI's staff reads the privacy portion
of the contract to the client.
2 6 The FI's contracts include a data privacy clause, describing how
and when data can be shared (in addition to credit bureau
2 7 The
FI requires written client consent to share personal
information).
information with any external audience, including credit bureaus,
2 8 The
FI requires
written
client consent
to use
information or
insurance
agents,
collections
companies,
andofothers.
photos in promotions, marketing material and other public
2 9 [group
lending] The FI trains group leaders to safeguard group
information.
member information, particularly saving account balances, dates
of loan disbursement, and information on repayment problems.

?
?
?

Policy includes
information
about how
privacy
information (how
client data is
If
applicable,
secured,
if/when
inform
clients
it is
that
their
distributed/repor
information
will
ted to the credit
be
reported
bureaus)
is to
the
credit
communicated to
bureau.
If
client, during
any
reporting
to
data
credit
bureau
collection/financi
mandated
al service by
law,
inform
application
clients
that
process,
ORthey
cannot
access a
during any
loan
withoutor
orientation
approving
that
educational
clause
sessions done
with clients.

?
?
?
?
?
?
?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

7-

1-

Client Protection Principle 7: Mechanisms for Complaints Resolution

The FI's clients are aware of how to submit complaints

1 The FI informs clients about:


their right to complain; and
2 - The
FI's
is atrained
to handle
complaintsperson (or where
how
to staff
submit
complaint
to the appropriate
could
find thatstaff
information
they dont
know it
first-hand).
2 1 they
The FI's
dedicated
inductionif training
includes
a session
on
how the complaints mechanism works, the loan officers role in
3 - The
FI's complaints
resolution
system
is active
and effective
the process
and how to
appropriately
manage
complaints
until
theyFI's
arepolicies
completely
resolved
(how
to handle
complaints
refer
3 1 The
include
how to
handle
complaints.
Theyand
include
themtotoinform
the appropriate
person
for investigation
and resolution).
how
client about
the complaint
mechanism.
3 2 The FI has an effective, appropriate system in place to resolve
complaints in a timely way.
3 3 The FI has assigned someone to handle complaints and refer
them to the appropriate person for resolution, at least on a part3 4 The
has a clear reporting system in place to ensure that
timeFIbasis.
complaints from branches/POS reach complaints handling staff.
3 5 The complaints mechanism is actively used by clients.

4-

7
7

7
7
7
7
7

6 The FI's clients receive a timely response to their issues, within a


month of complaint submission.
7 The FI's internal audit or other monitoring systems check that
complaints are resolved satisfactorily.

The FI uses client feedback to improve practices and


1 products
The FI uses information to correct mistakes, omissions and

activities that may be harmful to the client.


2 The FI uses complaints information to improve the organization's
operations/products/ communications.

There is a
distinction
between
Induction
submitting a
training
refers
complaint
and to
any
training for
receiving
new
loan
suggestions,
via
officers,
and may
a suggestion
box
include
on-thefor instance. A
job
training or
complaint
coaching.
expresses
Complaints
Nonetheless,
a
dissatisfaction,
should be
Suggestion
formalized
and
may
or
may
recorded with an
boxes
alone
area
training
program
not come
with
identification
generally
not
is
more effective
suggestion.
number
to
adequate.
to
ensure
Clients
should
facilitate
tracking
information
is
know
their
and resolution.
transmitted
complaints will
systematically.
be heard and
when possible
resolved. A
suggestion box
generally does
not convey this
message.

?
?
?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
[List
the key
results
Strengths
and
Areasof
ofthe
analysis,
citing the evidence.
Improvement].
Try
to regroup
as feasible
+ (for
strengths)
[List
key
results
Strengths
and
Areasof
ofthe
o (forthe
areas
of
improvement)
analysis,
citing the evidence.
Improvement].
Try
to regroup
as feasible
+ (for
strengths)
Strengths
and
Areas of
o (for areas of improvement)
Improvement].
+ (for strengths)
o (for areas of improvement)

?
?
?

?
?

[List the key results of the


analysis, citing the evidence.
Try to regroup as feasible
Strengths and Areas of
Improvement].
+ (for strengths)
o (for areas of improvement)

Documentation
Source document

Data analysis

Feedback from staff (HQ


and/or field staff) and Board

Feedback from FGD with


field staff (if applicable)

Feedback from FGD with


clients (if applicable)

Recommendations

Summary results

Client Protection Principle

1 Appropriate Product Design & D


2 Prevention of Over-Indebtednes
3 Transparency
4 Responsible Pricing
5 Fair & Respectful Treatment of c
6 Privacy of Client Data
7 Mechanisms for Complaints Reso
TOTAL

n/a

0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0

0
0
0
0
0
0
0
0

# of
indicat
?
ors % of 0 % of 1 % of 2
(w/o
n/a)
5
24
19
3
21
16
11
99

5
24
19
3
21
16
11
99

0%
0%
0%
0%
0%
0%
0%
0%

0%
0%
0%
0%
0%
0%
0%
0%

0%
0%
0%
0%
0%
0%
0%
0%

% of 1 % of 0
+2 + 1 + 2
0%
0%
0%
0%
0%
0%
0%
0%

-> see graph on the right ->

0%
0%
0%
0%
0%
0%
0%
0%

1
100%
7

2
50%

0%
6

1
100%
7

2
50%

0%
6

Legend:
% of indicators that meet the standard
% of indicators that partially meet the standard
% of indicators that do not meet the standard

Results Graphs by principle


Include these graphs into your report under each principle's definition.
Copy the graph, then in your Word report, choose "Paste Special">"Paste as an Image"
Appropriate Product Design & Delivery

Prevention of Over-Indebtedness

Transparency

Responsible Pricing

% of0%
2

% of0%
2

% of0%
2

% of0%
2

% of0%
1

% of0%
1

% of0%
1

% of0%
1

% of0%
0

% of0%
0

% of0%
0

% of0%
0

When 100% of the indicators are scored 2, the FI meets the standards in the area

When 100% of the indicators are scored 2, the FI meets the standards in the area

Fair & Respectful Treatment of clients

When 100% of the indicators are scored 2, the FI meets the standards in the area

Privacy of Client Data

Mechanisms for Complaints Resolution

% of0%
2

% of0%
2

% of0%
2

% of0%
1

% of0%
1

% of0%
1

% of0%
0

% of0%
0

% of0%
0

When 100% of the indicators are scored 2, the FI meets the standards in the area

When 100% of the indicators are scored 2, the FI meets the standards in the area

When 100% of the indicators are scored 2, the FI meets the standards in the area

When 100% of the indicators are scored 2, the FI meets the standards in the area

Legend:
% of indicators that meet the standard
% of indicators that partially meet the standard
% of indicators that do not meet the standard

Client Protection
Principle

Client Protection
Principle 1: Appropriate
Product Design and
Delivery

Standard

Product design

The FI designs products that are appropriate to client needs and do no harm. It
The FI designs products that
does not offer products that produce negative value for the clients.
are appropriate to client needs
and do no harm
The FI has a policy describing acceptable pledges of collateral; Has clear
guidelines for how collateral is registered and valued.

Client feedback

The FI seeks client feedback


for product design and
delivery

Sales techniques
Client Protection
Principle

Indicator

The FI investigates reasons for clients drop out.

The FI uses client feedback to inform product development and improve existing
products (client feedback can be informal).
The FI does not use high pressure/ aggressive sales techniques. Does not force
The FI does not use aggressive
clients to sign contracts (for credit, no forced signing of any individual borrower or
sales techniques
group member, or any guarantor).

Standard

Indicator
The FI policies support good repayment capacity analysis. The loan approval does
not rely solely on guarantees (whether peer guarantees, co-signers or collateral)
as a substitute for good capacity analysis.
[individual lending] Repayment capacity analysis is done for every loan.
[group lending] The group formation and loan approval process ensure the
prudent self-selection of members, with emphasis on the concept of solidarity
payment.

Repayment capacity
analysis

The FI conducts appropriate


client repayment capacity
analysis before disbursing a
loan

The FI's repayment capacity policy is adequately disseminated among staff,


considering the staff growth and turn-over.
The FI's repayment capacity policy is uniformly used in the practice.
The FI performs a repayment capacity analysis at each loan cycle, even if
simplified for secondary aspects at loan renewal.
For clients with informal revenues and/or non consumption loans (most cases),
the repayment capacity analysis is based on a client visit (performed by the loan
officer or delegated to the group/village members). The FI verifies the
information consistency through cross-checks. For clients with a salary asking for
a consumption loan, a client visit is not required.
Regular reports on PAR and write-offs are produced and reviewed by the FI's
management.
Reasonable portfolio quality is maintained over time. If there is poor long term
quality of loan portfolio, and linked to over-indebtedness, corrective measures
have been put in place.

Portfolio quality

The FI incentivizes quality


loans

The FI's productivity targets and incentive systems value portfolio quality at least
as highly as other factors, such as disbursement or client growth.
The FI's productivity targets and incentive schemes are reasonable as compared
to the industry benchmark (parameters and proportion of fixed/variable
remuneration).
If PAR is over 10% at the level of the MFI, bonuses are offered to loan officers able
to decrease PAR below 10%.

Client Protection
Principle 2: Prevention
of Over-indebtedness

[credit bureau] The FI policies include clear consultation and sharing of client data
(for all loan cycles).
[credit bureau] The FI systematically reviews client data from the credit bureau
(for borrower current debt levels and repayment history) to assess the client
repayment capacity prior to disbursement at each loan cycle. The FI also
systematically reports client data to the credit bureau.

Client Protection
Principle 2: Prevention
of Over-indebtedness
Information exchange

[credit bureau] [group lending] Groups access to up-to-date data from the credit
The FI uses credit bureau and bureau regarding borrower credit history: group members are provided with the
competitor data, as feasible in credit bureau credit checks done on other members.
local context
[no credit bureau] Policies include clear consultation and sharing of client data
(for all loan cycles), with competitors, as feasible in local context.
[no credit bureau] The FI regularly consults with and reports client data to
competitors (informal data exchanges consistent with legal limitations), as
feasible in local context.
The FI has a supervisory system in place to ensure that the credit bureau or
competitor data is effectively used to inform credit analysis and decisions.

The FI's management and Board of Directors show awareness and concern about
The FI Management and Board the risk of client over-indebtedness, and monitor it.
Mgt and BoD awareness of is aware of and concerned
OID
about the risk of overindebtedness
In high risk markets, stronger efforts are required. Management and Board of
Directors define what is high-risk. They review relevant market level information
(relevant to the current or planned operational area of the financial institution).

Monitoring of OID policies

The FI's internal audit


department monitors that
policies to prevent overindebtedness are applied

The FI's internal audit and/or internal controls department verifies the compliance
with the policies and systems to prevent the risk of client over-indebtedness.
The FI's internal audit and/or other departments (except for credit and/or
collections departments) visit a representative sample of clients each year.
The FI's MIS regularly provides information on rescheduled loans.
[group lending] The FI has a policy that avoids parallel loans within the MFI (i.e.,
combining loan products to meet the same need, or restricting the loan use).

Dangerous commercial
practices

The FI avoids dangerous


commercial practices

[group lending] The FI has prudent limits to allow for the renewal of a loan in case
of early repayment.
The FI has specific procedures to actively work out solutions (i.e., through workout
plan) for rescheduling loans/ refinancing/ writing off on an exceptional basis for
late clients who have the willingness to repay but not capacity to repay, prior
to seizing assets.

Client Protection
Principle

Standard

Indicator

The FI fully discloses to the clients all prices, installments, terms and conditions of
all financial products, including all charges and fees, associated prices, penalties,
linked products, 3rd party fees, and whether those can change over time.
Disclosure of cost/not-cost The FI fully discloses cost and
information
non-cost information

The FI clearly presents to clients the total amount that the client pays for the
product, regardless of local regulations (including in the absence of industry-wide
requirements).
The FI participates in the MFTransparency project (or similar industry project, if
applicable).
The FI has effective communication. Staff communicates in such a manner that
clients can understand the terms of the contract, their rights and obligations.
Staff communicates with techniques that address literacy limitations (e.g.,
materials available in local languages).
Communication with
clients

The FI communicates
proactively with clients in a
way that clients can easily
understand

Client Protection
Principle 3: Transparency

The FI contracts contain simple language and no fine print (figuratively or


literally). A clear facts summary page is given if the legally necessary contract is
deemed too technical for the clients.

The FI avoids using pricing mechanisms that create confusion on the total costs.

Disclosure mechanisms

The FI uses a variety of


disclosure mechanisms

The FI uses at least two different communication channels for disclosing clear and
accurate information about the product: written and verbal (to address literacy
limitations).
The FI discloses pricing information in public domain.

Client review

The FI communicates all information related to the product (terms, conditions,


etc.) to clients before signing.
The FI leaves adequate time
The FI gives clients adequate time to review the terms and conditions of the
for client review and discloses product, ask questions and receive additional information prior to signing
at multiple times
contracts.
The FI staff is available to answer questions.
The FI gives clients a hard copy of all documents signed by clients (including, but
not limited to the contract) with all terms and conditions. The FI ensures that
there are no blank terms in all documents signed by clients (including, but not
limited to, contracts) they must be completely filled out.

Account information

The FI provides accurate and


timely account information

Account information

The FI provides accurate and


timely account information

[group lending] Each client receives a contract, and/or an individual pass/book or


payment book with contact terms and signature (even if the contract is between
the group and the financial institution).
The FI regularly gives clients clear and accurate information regarding their
accounts (e.g., account statements, receipts, balance inquiries, proof of payment
for loans).
The FI provides clients with updated balances on request.

Client Protection
Principle

Standard
Pricing

Client Protection
Principle 4: Responsible
Pricing

Efficiency
Fees

Client Protection
Principle

Indicator
The FI offers market-based,
non-discriminatory pricing
The FIs efficiency is in line
with its peers
The FI does not charge
excessive fees

Standard

The FI offers market-based, non-discriminatory pricing.


The FI has efficiency ratios aligned with peers.
The FI's pre-payment penalties, account closure fees, transaction fees or other
penalties are not excessive.
Indicator
The FI clearly spells out in a Code of Conduct (i.e., in Code of Conduct, Code of
Ethics, Book of Staff Rules) the organizational values and standards of
professional conduct that are expected of all staff.

Institutional culture

The FI culture raises


awareness and concern about
The FI's Code of Conduct has been reviewed and approved by the Board.
fair and responsible treatment
The FI's staff signs a document by which they acknowledge that they will abide to
of clients
the standards of professional conduct and not engage in the prohibited behaviors
mentioned in the Code of Conduct.
The FI clearly spells out in a Code of Conduct (i.e., in Code of Conduct, Code of
Ethics, Book of Staff Rules) the specific standards of professional conduct that are
expected of all staff involved in collection (including third party staff).

Debt collection practices

The FI has defined in specific


detail what it considers to be
appropriate debt collection
practices

The FI does not endorse a policy of zero tolerance for PAR.


The FI's policy guarantees that clients receive a fair price for any confiscated
assets; Has procedures to ensure that collateral seizing is respectful of clients'
rights; Offers an explanation of the role of guarantors. In case collateral is kept in
the financial institution premises, procedures are in place to ensure its security.
The FI staff is recruited and trained in line with the Code of Ethics.

HR aligned with ethics

Client Protection
Principle 5: Fair and
Respectful Treatment of
Clients

The FI's HR policies


(recruitment, training) are
aligned around fair and
responsible treatment of
clients

The FI staff is trained in line with the Code of Ethics: initial training includes a
review of the Code of Conduct and a discussion with new staff on the situations
where the compliance with the Code might be a challenge.

The FI's collection practices are covered during the initial training of all staff
involved in collections (loan officers, collections staff, and branch managers). In
particular, collections staff receives training in acceptable debt collections
practices and loan recovery procedures.

The FI managers and supervisors review ethical behavior, professional conduct


and the quality of interaction with customers as part of staff performance
evaluations.

Client Protection
Principle 5: Fair and
Respectful Treatment of
Clients
Policies to promote ethics
and prevent fraud

The FI implements policies to


promote ethics and prevent
fraud

The FI's procedures describe the sanctions that will be taken in case of violation of
the Code of Conduct or collections policies (harassment, discrimination, theft,
corruption, kickbacks, etc.), that can result in termination of employment.
The FI staff is informed of penalties for non-compliance with Code of Conduct or
collections policies.

There is sufficient monitoring of the practices (by operations department, internal


audits), to provide education or sanctions as necessary.

The FI sanctions cases of violations of the Code of Conduct or collections policies


(identified by management, internal audit or thanks to an efficient complaint
mechanism) according to the set rules.

No discrimination

3rd party collections

In selection and treatment of


clients, the FI does not
discriminate inappropriately
against certain categories of
clients
In-house and 3rd party
collections staff are expected
to follow the same practices
as the FI staff

The loan officer base pay is at least a living wage.


The FI has a non-discrimination policy.
The FI's rescheduling policies are applied in a consistent and fair way across the
financial institution.
The same training is provided to third party collections staff in case collection is
subcontracted and they are held to the same standards as the FI staff.

The FI informs clients of the main aspects of the Code of Conduct. Information
includes clients right to complain and how to submit a complaint.

Clients informed of rights

The FI informs clients of their


rights

[group lending] The FI informs clients about procedures about collateral seizing.

Clients informed of rights

The FI informs clients of their


rights

The FI documents and communicates to clients loan policies and procedures for
rescheduling credit.

Client Protection
Principle

Standard

Indicator
The FI has a written privacy policy that governs the gathering, processing, use,
distribution and storage of client information. The policy covers current staff and
those who leave the organization and information leakage.

The FI's privacy clause is in plain language and not hidden in legalese or contract.
The privacy clause stands out and is not in small print.

Privacy policy and IT


systems

The FI's Staff Book of Rules and/or Code of Conduct penalize misuse or
The FI has a privacy policy and misappropriation of client data.
appropriate technology
The FI has penalties for exposing or revealing client data to third parties without
systems
prior client consent.
The FI's has systems in place (including secure IT systems) to protect the
confidentially, security, accuracy and integrity of customers personal and
financial information.
The FI's IT systems in place have different password protection systems that are
changed periodically with different access levels according to the position of the
staff member accessing the data.
If files are stored in physical format, the FI stores the client files in a secure
location, within the branch or headquarters that has 1) restricted access only to
selected persons; 2) is kept in a facility secure from arson or theft.

The FI has a policy (included in the training manual) to describe how to talk to
clients about this topic. Requires that the FI present clearly to clients how it will
use and share their client data.

Client Protection
Principle 6: Privacy of
Client Data

The FI communicates well the privacy policy to staff.

Clients informed of data


sharing

The FI informs clients about


when and how their data is
shared and gets their consent

The FI trains its staff to protect the confidentially, security, accuracy and integrity
of customers personal and financial information.
The FI informs customers how their information will be used internally and, when
applicable, when it will be shared externally.
Prior to loan disbursement, the FI's staff reads the privacy portion of the contract
to the client.
The FI's contracts include a data privacy clause, describing how and when data
can be shared (in addition to credit bureau information).
The FI requires written client consent to share personal information with any
external audience, including credit bureaus, insurance agents, collections
companies, and others.

The FI requires written client consent to use of information or photos in


promotions, marketing material and other public information.

[group lending] The FI trains group leaders to safeguard group member


information, particularly saving account balances, dates of loan disbursement,
and information on repayment problems.

Client Protection
Principle

Standard

Indicator

Client awareness

The FI's clients are aware of


how to submit complaints

Staff trained

The FI's staff is trained to


handle complaints

The FI informs clients about:


their right to complain; and
how to submit a complaint to the appropriate person (or where they could find
that information if they dont know it first-hand).
The FI's dedicated staff induction training includes a session on how the
complaints mechanism works, the loan officers role in the process and how to
appropriately manage complaints until they are completely resolved (how to
handle complaints and refer them to the appropriate person for investigation and
resolution).
The FI's policies include how to handle complaints. They include how to inform
client about the complaint mechanism.

The FI has an effective, appropriate system in place to resolve complaints in a


timely way.
Client Protection
Principle 7: Mechanisms
for Complaints
Resolution

Active and effective


system

The FI's complaints resolution


system is active and effective

The FI has assigned someone to handle complaints and refer them to the
appropriate person for resolution, at least on a part-time basis.
The FI has a clear reporting system in place to ensure that complaints from
branches/POS reach complaints handling staff.
The complaints mechanism is actively used by clients.
The FI's clients receive a timely response to their issues, within a month of
complaint submission.
The FI's internal audit or other monitoring systems check that complaints are
resolved satisfactorily.

Feedback used

The FI uses client feedback to


improve practices and
products

The FI uses information to correct mistakes, omissions and activities that may be
harmful to the client.

The FI uses complaints information to improve the organization's


operations/products/ communications.

?
?
?
?
?

?
?
?
?
?
?
?
?
?

?
?
?
?
?
?
?

?
?
?
?
?
?

?
?
?

?
?
?
?
?
?
?

?
?
?

?
?
?

?
?
?

?
?
?
?
?

?
?

?
?
?
?
?

?
?
?
?
?
?

?
?
?
?
?
?

?
?

?
?
?
?
?

Gap Analysis and Recommendations

Client Protection Principle 1: Appropriate Product Design and Delivery


The FI designs products that are appropriate to client needs and do no harm
The FI designs products that are appropriate to client needs and do no harm. It does not offer products that produce negative value
for the clients.
The FI has a policy describing acceptable pledges of collateral; Has clear guidelines for how collateral is registered and valued.

Recommendations

?
?

The FI seeks client feedback for product design and delivery

Recommendations

The FI investigates reasons for clients drop out.

The FI uses client feedback to inform product development and improve existing products (client feedback can be informal).

The FI does not use aggressive sales techniques


The FI does not use high pressure/ aggressive sales techniques. Does not force clients to sign contracts (for credit, no forced signing
of any individual borrower or group member, or any guarantor).

Recommendations

Client Protection Principle 2: Prevention of Over-indebtedness


The FI conducts appropriate client repayment capacity analysis before disbursing a loan
The FI policies support good repayment capacity analysis. The loan approval does not rely solely on guarantees (whether peer
guarantees, co-signers or collateral) as a substitute for good capacity analysis.
[individual lending] Repayment capacity analysis is done for every loan.
[group lending] The group formation and loan approval process ensure the prudent self-selection of members, with emphasis on the
concept of solidarity payment.

Recommendations

The FI's repayment capacity policy is adequately disseminated among staff, considering the staff growth and turn-over.

The FI's repayment capacity policy is uniformly used in the practice.

The FI performs a repayment capacity analysis at each loan cycle, even if simplified for secondary aspects at loan renewal.

For clients with informal revenues and/or non consumption loans (most cases), the repayment capacity analysis is based on a client
visit (performed by the loan officer or delegated to the group/village members). The FI verifies the information consistency through
cross-checks. For clients with a salary asking for a consumption loan, a client visit is not required.

The FI incentivizes quality loans

Recommendations

Regular reports on PAR and write-offs are produced and reviewed by the FI's management.

Reasonable portfolio quality is maintained over time. If there is poor long term quality of loan portfolio, and linked to overindebtedness, corrective measures have been put in place.
The FI's productivity targets and incentive systems value portfolio quality at least as highly as other factors, such as disbursement
or client growth.
The FI's productivity targets and incentive schemes are reasonable as compared to the industry benchmark (parameters and
proportion of fixed/variable remuneration).
If PAR is over 10% at the level of the MFI, bonuses are offered to loan officers able to decrease PAR below 10%.

?
?
?
?

The FI uses credit bureau and competitor data, as feasible in local context
[credit bureau] The FI policies include clear consultation and sharing of client data (for all loan cycles).
[credit bureau] The FI systematically reviews client data from the credit bureau (for borrower current debt levels and repayment
history) to assess the client repayment capacity prior to disbursement at each loan cycle. The FI also systematically reports client
data to the credit bureau.
[credit bureau] [group lending] Groups access to up-to-date data from the credit bureau regarding borrower credit history: group
members are provided with the credit bureau credit checks done on other members.
[no credit bureau] Policies include clear consultation and sharing of client data (for all loan cycles), with competitors, as feasible in
local context.
[no credit bureau] The FI regularly consults with and reports client data to competitors (informal data exchanges consistent with
legal limitations), as feasible in local context.
The FI has a supervisory system in place to ensure that the credit bureau or competitor data is effectively used to inform credit
analysis and decisions.

Recommendations

?
?
?
?
?
?
Recommendations

The FI Management and Board is aware of and concerned about the risk of over-indebtedness
The FI's management and Board of Directors show awareness and concern about the risk of client over-indebtedness, and monitor it.
In high risk markets, stronger efforts are required. Management and Board of Directors define what is high-risk. They review
relevant market level information (relevant to the current or planned operational area of the financial institution).

The FI's internal audit department monitors that policies to prevent over-indebtedness are applied

?
?
Recommendations

The FI's internal audit and/or internal controls department verifies the compliance with the policies and systems to prevent the risk
of client over-indebtedness.
The FI's internal audit and/or other departments (except for credit and/or collections departments) visit a representative sample of
clients each year.
The FI's MIS regularly provides information on rescheduled loans.

?
?
?

The FI avoids dangerous commercial practices


[group lending] The FI has a policy that avoids parallel loans within the MFI (i.e., combining loan products to meet the same need, or
restricting the loan use).
[group lending] The FI has prudent limits to allow for the renewal of a loan in case of early repayment.
The FI has specific procedures to actively work out solutions (i.e., through workout plan) for rescheduling loans/ refinancing/ writing
off on an exceptional basis for late clients who have the willingness to repay but not capacity to repay, prior to seizing assets.

Recommendations

?
?
?

Client Protection Principle 3: Transparency


The FI fully discloses cost and non-cost information
The FI fully discloses to the clients all prices, installments, terms and conditions of all financial products, including all charges and
fees, associated prices, penalties, linked products, 3rd party fees, and whether those can change over time.

[credit]
[savings]
[insurance]
[payments]
The FI clearly presents to clients the total amount that the client pays for the product, regardless of local regulations (including in
the absence of industry-wide requirements).
The FI participates in the MFTransparency project (or similar industry project, if applicable).

Recommendations

?
?
?
?
?
?
?

The FI communicates proactively with clients in a way that clients can easily understand
The FI has effective communication. Staff communicates in such a manner that clients can understand the terms of the contract,
their rights and obligations. Staff communicates with techniques that address literacy limitations (e.g., materials available in local
languages).
The FI contracts contain simple language and no fine print (figuratively or literally). A clear facts summary page is given if the
legally necessary contract is deemed too technical for the clients.

The FI avoids using pricing mechanisms that create confusion on the total costs.

Recommendations

?
?

The FI uses a variety of disclosure mechanisms


The FI uses at least two different communication channels for disclosing clear and accurate information about the product: written
and verbal (to address literacy limitations).
The FI discloses pricing information in public domain.

Recommendations

?
?

The FI leaves adequate time for client review and discloses at multiple times

Recommendations

The FI communicates all information related to the product (terms, conditions, etc.) to clients before signing.

The FI gives clients adequate time to review the terms and conditions of the product, ask questions and receive additional
information prior to signing contracts.
The FI staff is available to answer questions.

?
?

The FI provides accurate and timely account information


The FI gives clients a hard copy of all documents signed by clients (including, but not limited to the contract) with all terms and
conditions. The FI ensures that there are no blank terms in all documents signed by clients (including, but not limited to, contracts)
they must be completely filled out.
[group lending] Each client receives a contract, and/or an individual pass/book or payment book with contact terms and signature
(even if the contract is between the group and the financial institution).
The FI regularly gives clients clear and accurate information regarding their accounts (e.g., account statements, receipts, balance
inquiries, proof of payment for loans).
The FI provides clients with updated balances on request.

Recommendations

?
?
?
?

Client Protection Principle 4: Responsible Pricing


The FI offers market-based, non-discriminatory pricing
The FI offers market-based, non-discriminatory pricing.

Recommendations

The FIs efficiency is in line with its peers


The FI has efficiency ratios aligned with peers.

Recommendations

The FI does not charge excessive fees


The FI's pre-payment penalties, account closure fees, transaction fees or other penalties are not excessive.

Recommendations

Client Protection Principle 5: Fair and Respectful Treatment of Clients


The FI culture raises awareness and concern about fair and responsible treatment of clients
The FI clearly spells out in a Code of Conduct (i.e., in Code of Conduct, Code of Ethics, Book of Staff Rules) the organizational values
and standards of professional conduct that are expected of all staff.
The FI's Code of Conduct has been reviewed and approved by the Board.

Recommendations

?
?

The FI's staff signs a document by which they acknowledge that they will abide to the standards of professional conduct and not
engage in the prohibited behaviors mentioned in the Code of Conduct.

The FI has defined in specific detail what it considers to be appropriate debt collection practices
The FI clearly spells out in a Code of Conduct (i.e., in Code of Conduct, Code of Ethics, Book of Staff Rules) the specific standards of
professional conduct that are expected of all staff involved in collection (including third party staff).
The FI does not endorse a policy of zero tolerance for PAR.
The FI's policy guarantees that clients receive a fair price for any confiscated assets; Has procedures to ensure that collateral seizing
is respectful of clients' rights; Offers an explanation of the role of guarantors. In case collateral is kept in the financial institution
premises, procedures are in place to ensure its security.

Recommendations

?
?
?

The FI's HR policies (recruitment, training) are aligned around fair and responsible treatment of clients

Recommendations

The FI staff is recruited and trained in line with the Code of Ethics.

The FI staff is trained in line with the Code of Ethics: initial training includes a review of the Code of Conduct and a discussion with
new staff on the situations where the compliance with the Code might be a challenge.
The FI's collection practices are covered during the initial training of all staff involved in collections (loan officers, collections staff,
and branch managers). In particular, collections staff receives training in acceptable debt collections practices and loan recovery
procedures.

?
?

The FI implements policies to promote ethics and prevent fraud

Recommendations

The FI managers and supervisors review ethical behavior, professional conduct and the quality of interaction with customers as part
of staff performance evaluations.
The FI's procedures describe the sanctions that will be taken in case of violation of the Code of Conduct or collections policies
(harassment, discrimination, theft, corruption, kickbacks, etc.), that can result in termination of employment.

The FI staff is informed of penalties for non-compliance with Code of Conduct or collections policies.

There is sufficient monitoring of the practices (by operations department, internal audits), to provide education or sanctions as
necessary.
The FI sanctions cases of violations of the Code of Conduct or collections policies (identified by management, internal audit or
thanks to an efficient complaint mechanism) according to the set rules.
The loan officer base pay is at least a living wage.

?
?

In selection and treatment of clients, the FI does not discriminate inappropriately against certain categories of clients
The FI has a non-discrimination policy.
The FI's rescheduling policies are applied in a consistent and fair way across the financial institution.

Recommendations

?
?

In-house and 3rd party collections staff are expected to follow the same practices as the FI staff
The same training is provided to third party collections staff in case collection is subcontracted and they are held to the same
standards as the FI staff.

Recommendations

The FI informs clients of their rights


The FI informs clients of the main aspects of the Code of Conduct. Information includes clients right to complain and how to submit
a complaint.
[group lending] The FI informs clients about procedures about collateral seizing.

Recommendations

?
?

The FI documents and communicates to clients loan policies and procedures for rescheduling credit.

?
Client Protection Principle 6: Privacy of Client Data
The FI has a privacy policy and appropriate technology systems

Recommendations

The FI has a written privacy policy that governs the gathering, processing, use, distribution and storage of client information. The
policy covers current staff and those who leave the organization and information leakage.
The FI's privacy clause is in plain language and not hidden in legalese or contract. The privacy clause stands out and is not in small
print.

The FI's Staff Book of Rules and/or Code of Conduct penalize misuse or misappropriation of client data.

?
?

The FI has penalties for exposing or revealing client data to third parties without prior client consent.
The FI's has systems in place (including secure IT systems) to protect the confidentially, security, accuracy and integrity of
customers personal and financial information.
The FI's IT systems in place have different password protection systems that are changed periodically with different access levels
according to the position of the staff member accessing the data.
If files are stored in physical format, the FI stores the client files in a secure location, within the branch or headquarters that has 1)
restricted access only to selected persons; 2) is kept in a facility secure from arson or theft.

?
?
?

The FI informs clients about when and how their data is shared and gets their consent
The FI has a policy (included in the training manual) to describe how to talk to clients about this topic. Requires that the FI present
clearly to clients how it will use and share their client data.

Recommendations

The FI communicates well the privacy policy to staff.

The FI trains its staff to protect the confidentially, security, accuracy and integrity of customers personal and financial information.

The FI informs customers how their information will be used internally and, when applicable, when it will be shared externally.

Prior to loan disbursement, the FI's staff reads the privacy portion of the contract to the client.

The FI's contracts include a data privacy clause, describing how and when data can be shared (in addition to credit bureau
information).
The FI requires written client consent to share personal information with any external audience, including credit bureaus, insurance
agents, collections companies, and others.
The FI requires written client consent to use of information or photos in promotions, marketing material and other public information.

[group lending] The FI trains group leaders to safeguard group member information, particularly saving account balances, dates of
loan disbursement, and information on repayment problems.

?
?
?

Client Protection Principle 7: Mechanisms for Complaints Resolution


The FI's clients are aware of how to submit complaints
The FI informs clients about:
their right to complain; and
how to submit a complaint to the appropriate person (or where they could find that information if they dont know it first-hand).

Recommendations

The FI's staff is trained to handle complaints


The FI's dedicated staff induction training includes a session on how the complaints mechanism works, the loan officers role in the
process and how to appropriately manage complaints until they are completely resolved (how to handle complaints and refer them
to the appropriate person for investigation and resolution).

Recommendations

The FI's complaints resolution system is active and effective


The FI's policies include how to handle complaints. They include how to inform client about the complaint mechanism.
The FI has an effective, appropriate system in place to resolve complaints in a timely way.

Recommendations

?
?

The FI has assigned someone to handle complaints and refer them to the appropriate person for resolution, at least on a part-time
basis.
The FI has a clear reporting system in place to ensure that complaints from branches/POS reach complaints handling staff.

The complaints mechanism is actively used by clients.

?
?
?

The FI's clients receive a timely response to their issues, within a month of complaint submission.
The FI's internal audit or other monitoring systems check that complaints are resolved satisfactorily.

The FI uses client feedback to improve practices and products

Recommendations

The FI uses information to correct mistakes, omissions and activities that may be harmful to the client.

The FI uses complaints information to improve the organization's operations/products/ communications.

Pricing - Portfolio Yield


To analyze indicator 4.1.1

MFIs

MFI
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other
Other

Average
Loan
Balance
(local
currency)

100
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs
MFIs

in
in
in
in
in
in
in
in
in
in
in
in
in
in

country
country
country
country
country
country
country
country
country
country
country
country
country
country

Portfolio
yield

25.0%

Active
borrowers

50

Outstanding
GLP (local
currency(

5,000

Po r tfo lio yield (n o m in al)

Source: (indicate the source)


Loan Size and Portfolio Yield in Country

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%
0

20

40
60
80
100
Average outstanding loan size (local currency)

120

Portfolio Performance
Collect the data related to the evolution of credit risk of the MFI and fill in the table below to generate the graph. You need to adapt the y and x axis of the graph. Collect amounts (and
not %) in order to be able to check data reliability in the MIS.
This refers to the indicator CPP 2.2.2.
Adapt PAR categories here
1-30
31-90
91-180
181-365
>365
2010

2011

2012

Total loan portfolio outstanding


PAR 1-30
PAR 31-90
PAR 91-180
PAR 181-365
PAR >365
Write off of the period
Rescheduled and refinanced loans
PAR > 30
NPL 1 (%)
NPL 30 (%)
Write-off ratio (%)
Rescheduled and refinanced loans (%)
Total credit risk ratio
Smart max. limit
Portfolio growth

12.0%

12.0%

10.0%

10.0%

8.0%

8.0%
6.0%

6.0%

4.0%

4.0%
n/a
n/a
n/a
n/a
n/a

n/a
n/a
n/a
n/a
n/a
10%

n/a

n/a
n/a
n/a
n/a
n/a
10%

n/a

2.0%

2.0%

0.0%

0.0%
2010

2011
Write-off

NPL 30 (%)
Res cheduled and refinanced loans (%)
S mart max. limit

10%
n/a

2012

ratio (%)
Total credit ris k ratio

NPL 30 (%)

Write-off ratio (%)

Rescheduled and refinanced loans (%)

In case of rapid PAR increase or decrease, analyze the trends over the past 24 months
Total loan portfolio outstanding
PAR 1-30
PAR 31-90
PAR 91-180
PAR 181-365
PAR >365
Write off of the period
Rescheduled and refinanced loans
PAR > 30
NPL 1 (%)
NPL 30 (%)
Write-off ratio (%)
Rescheduled and refinanced loans (%)
Total credit risk ratio
Smart max. limit
Portfolio growth

janv.-11

n/a
n/a

fvr.-11

n/a
n/a
n/a
n/a
n/a

n/a
10%

mars-11

n/a
n/a
n/a
n/a
n/a
10%

avr.-11

n/a
n/a
n/a
n/a
n/a
10%

mai-11

n/a
n/a
n/a
n/a
n/a
10%

juin-11

n/a
n/a
n/a
n/a
n/a
10%

juil.-11

n/a
n/a
n/a
n/a
n/a
10%

aot-11

n/a
n/a
n/a
n/a
n/a
10%

sept.-11

n/a
n/a
n/a
n/a
n/a
10%

oct.-11

n/a
n/a
n/a
n/a
n/a
10%

nov.-11

n/a
n/a
n/a
n/a
n/a
10%

dc.-11

n/a
n/a
n/a
n/a
n/a
10%

janv.-12

n/a
n/a
n/a
n/a
n/a
10%

fvr.-12

n/a
n/a
n/a
n/a
n/a
10%

mars-12

n/a
n/a
n/a
n/a
n/a
10%

avr.-12

n/a
n/a
n/a
n/a
n/a
10%

mai-12

n/a
n/a
n/a
n/a
n/a
10%

juin-12

n/a
n/a
n/a
n/a
n/a
10%

juil.-12

n/a
n/a
n/a
n/a
n/a
10%

aot-12

n/a
n/a
n/a
n/a
n/a
10%

sept.-12

n/a
n/a
n/a
n/a
n/a
10%

oct.-12

n/a
n/a
n/a
n/a
n/a
10%

nov.-12

n/a
n/a
n/a
n/a
n/a
10%

dc.-12

n/a
n/a
n/a
n/a
n/a
10%

10%

Peer - Benchmarking
MFI1
Start of operations
Number of branches
Active Borrowers
Depositors
Gross Loan Portfolio (local currency)
Average outstanding balance/ per capita income
Per capita income
Average outstanding balance/ per capita income
Average savings balance per active depositor
PAR 30 (%)
Write-off ratio (%)
OSS (Operational Self-Sufficiency)
Portfolio yield (nominal)
Operating expense ratio
ROA
ROE
Loans per Loan Officer
Adjusted presonnel expense / avg GLP
Average salary/ GDP per capita

Source: MIX Market (www.mixmarket.org)

MFI2

MFI3

MFI4

MFI5