New Delhi, India, December 14, 2011—IFC,
a member of the World Bank Group, is working with India’s Microfinance
Institutions Network to encourage microfinance institutions to begin reporting
data to the country’s Credit Information Bureau, which will help strengthen
the institutions’ ability to lend responsibly while protecting the interests
of borrowers.
The Reserve Bank of India has made it
mandatory for non-banking financial companies and microfinance institutions
to report to credit bureaus but most microfinance institutions in India
have yet to adopt the practice, which is essential to the success of the
Credit Information Bureau. To raise awareness about this initiative, IFC
hosted a credit reporting workshop today which was attended by banks, microfinance
institutions and industry experts. The workshop is supported by the Omidyar
Network, HSBC, and Citigroup.
“In India, the microfinance sector has
great potential in terms of the number of clients served,” said Alok Prasad,
CEO of the Microfinance Institutions Network. “However, with a fast-growing
sector, multiple borrowings by clients had become an issue. We have
worked with IFC to ensure that more and more microfinance institutions
are encouraged to report to credit bureaus and have mandated that our network
members report and use credit reports from the Credit Information Bureau.”
Getting all lending institutions to participate
in credit reporting is important to ensure reliable credit assessments
before loans are made. More effort is also required to raise awareness
among microfinance borrowers about the benefits of maintaining timely payments
and building a credit record that can benefit when they apply for future
loans.
“IFC’s support to credit-bureau reporting
is a part of its responsible-finance strategy, which promotes more responsible
lending based on full information about the creditworthiness of borrowers,”
said Jennifer Isern, who leads IFC’s Access to Finance work in South Asia.
“In the past year,
IFC has been working with its partners in the sector towards building good
practices on responsible finance and responding to client demand.”
About IFC
IFC, a member of the World Bank Group, is the largest global development
institution focused exclusively on the private sector. We help developing
countries achieve sustainable growth by financing investment, providing
advisory services to businesses and governments, and mobilizing capital
in the international financial markets. In fiscal 2011, amid economic uncertainty
across the globe, we helped our clients create jobs, strengthen environmental
performance, and contribute to their local communities—all while driving
our investments to an all-time high of nearly $19 billion. For more information,
visit www.ifc.org.
About Microfinance Institutions Network
Microfinance Institutions Network (MFIN)
is the premier industry association for the microfinance sector in India
and its member organizations constitute the leading Microfinance institutions
in the country. MFIN was created to promote the key objectives of microfinance,
which is to help economically underserved communities achieve greater financial
independence and build sustainable livelihoods. MFIN seeks to work closely
with regulators and other key stakeholders to achieve larger financial
inclusions goals through microfinance. Currently MFIN member organizations
consist of 46 of the leading NBFC/MFIs whose combined business constitutes
over 80% of the Indian microfinance sector. For more information, visit
http://www.mfinindia.org
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