Responsible Microfinance: Community Bankers Program
Around the world, about 2.5 billion adults are unbanked or without access to financial services, 59% of them in East and South-East Asia. Some 200 million small and medium-sized enterprises are also unbanked, with about half of them in East Asia. Mainstream banks neglect them because they live in remote rural areas and have no assets or dependable income. They are forced to rely on unregulated moneylenders and endure crippling interest rates.
Microfinance institutions (MFIs) are opening new financial options for people living in poverty, offering products and services designed to meet their special needs. Delivered responsibly, microloans are a powerful tool to fight poverty. But they can cause harm if sold to vulnerable people who cannot realistically repay the debt.
That’s why Good Return only partners with organisations that share our social mission. They also believe in our integrated approach of delivering responsible microfinance alongside skills development programs. Our goal is to help their bankers deliver financial services that are responsible – safe, affordable, and reliable banking products, and inclusive – available to everyone, particularly those living in remote, marginalised communities.
» Click here to see what makes a good Community Banker
Deliver responsible microfinance
Good Return starts this by working with our partners to review their policies, processes, and products. We suggest areas for improvement and help them implement the changes. We train their management in social performance management so they can measure their progress towards social goals in delivering responsible microfinance to their communities.
Believe in a social mission
Knowing what to do is one thing – to walk the talk is another. We select our partners carefully, and only work with MFIs who passionately believe in social responsibility.
Good bankers care enough about the well-being of their clients to willingly put social goals on a par with financial targets.
Adopt new ideas
As a leading adviser in the microfinance sector, we continue to look for new concepts and tools to review, track, and manage our partners’ social performance.
New initiatives we’ve been working on include the Universal Standards for Social Performance Management (USSPM), the Smart Campaign, the Microﬁnance Information Exchange (MIX) and Progress out of Poverty Index (PPI).
Deliver what’s needed where it’s needed
Good bankers are good listeners. They need to understand their clients so they can recommend products that truly meet their needs, and protect them from financial risks such as over-indebtedness.
Our bankers work in the foothills of Nepal, the jungles of Borneo, and the rice paddies of Cambodia. They travel by motorbike, bus, or boat. They deliver affordable savings, loans, insurance, and other financial services to the doorsteps of people living in some of the region’s poorest and most remote communities.
Good bankers are committed to extending ﬁnancial inclusion to everyone, making sure no one in their communities is left unbanked.
» Click here to see more on our Social Performance Management initiativesYou may have heard about the microfinance crisis in India a few years ago. Several people committed suicide after borrowing from multiple lenders and faced defaulting on their debt. Too large a supply of credit, even if intended to benefit the poor, can cause harm.
How can we be confident microfinance is helping, when there are such examples as this? One solution is to assess objectively if we are achieving our social mission. Essentially, this is what we mean by social performance management. It’s a broad term for a suite of tools which allows organisations to measure the social benefits of their work.
Currently, we’re developing these initiatives.
Universal Standards for Social Performance Management (USSPM)
The USSPM (website) is a manual of best practices in the microfinance sector to help financial institutions achieve their social goals. The manual is organised into six dimensions:
- Define and monitor social goals
- Ensure board, management, and employee commitment to social goals
- Design products, services, delivery models and channels that meet clients’ needs and preferences
- Treat clients responsibly
- Treat employees responsibly
- Balance financial and social performance
The Smart Campaign (website) provides microfinance institutions with tools and resources to deliver transparent, respectful, and prudent financial services to clients. It sets out the minimum standards that clients should expect including:
- Appropriate product design and delivery
- Prevention of over-indebtedness
- Responsible pricing
- Fair and respectful treatment of clients
- Privacy of client data
- Mechanisms for complaint resolution
Microﬁnance Information Exchange (MIX)
MIX promotes responsible financial services through data analytics and market insight, using the following two platforms:
- MIX Market (website) is a public data hub where microfinance institutions and supporting organisations share institutional data to create transparency and market insight.
- FINclusion Lab (website) is an analysis and data visualisation workshop designed to coordinate the delivery of responsible financial services to underserved communities.
Progress out of Poverty Index (PPI)
The Progress out of Poverty Index (website) is a tool to measure poverty through a questionnaire about a household’s characteristics and asset ownership. Answers are scored and evaluate the likelihood that the household is living below or above the poverty line. The PPI can help identify people who are most likely to be poor or vulnerable to poverty. This data can then be used for assessments and strategic decision-making purposes.
Meet Our Community Bankers
Our Community Bankers come from diverse backgrounds. But they all have one thing in common: their commitment to help people break out of the poverty cycle.
Here are four Community Bankers who have let us follow them through their working journey. Read their stories to find out about their challenges, joy and hope at work and in life.
Curious to know more? Please send in a question – ask us anything.
Our Plan and Results
Good Return’s effort on Social Performance Management (SPM) has had positive results as we develop the expertise of our partners. As such, going into 2015 we will continue to work on measuring and tracking poverty (Progress out of Poverty Index or PPI), client protection, and promotion of the Universal Standards for Social Performance Management (USSPM).
We endorse the USSPM as they guide our MFI partners in managing their social, environmental and financial performance – with special attention to poverty tracking, client protection, and a community based agenda.
Budget: Where your funds were invested
Impact: How your funds made a difference
“Providing the poor access to financial services comes with it a deep responsibility of ensuring that these will not drive them deeper into debt and more hardship. Responsible microfinance providers prepare the poor by educating them on the intricacies of managing money and how to seize new opportunities to improve their future. Hence, microfinance should promote entrepreneurship rather than consumerism.”
Rico Munoz, General Manager of SPBD Fiji
Your support will help community bankers like Rico provide responsible microfinance and promote entrepreneurship in his community.
Enter the amount you would like to give. All donations over $2 are tax deductible and will be partly matched by Australian Aid.