In view of the growing concern for potential vulnerability of MF clients, the SHGPF likes to discuss and design a consumer protection code. Consumer protection is not antipathy for business growth; rather, it fosters the development of confidence and trust among consumers. SHGPF has developed a Memorandum on MF Consumer Protection Code and is widely circulating this for consideration and adoption by all the MF players. This code is intended to protect the rights of the MF clients ensuring that they are treated with dignity and respect and at the same time that MFIs them with the highest quality products and services. FORUM will seek to achieve the above through Advocacy and this code could also be used to lobby for better consideration of microfinance clients in any donor intervention or microfinance regulations.
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Microfinance evolved as an alternative form of finance for poor who were previously excluded from the traditional financial systems.
It was also rooted in humanitarian soil and driven by a desire to help the poor improve their well-being. But today, microfinance is becoming a commercial business as it has proved to be profitable, even while maintaining its original social objective. Different categories of actors (banks, investment funds, etc.) are now entering the microfinance industry.
In most countries, microfinance institutions previously registered as nonprofit have transformed or are in the process of transforming into profit-oriented entities. As microfinance becomes more commercial, it is important to make sure that the consumer is not exploited, but rather protected. The recent backlash against exploitative lenders that has been
seen in different countries to date, such as Bolivia and South Africa, can be devastating to the whole microfinance industry. In addition, the happenings in AP are also worth motioning here. Consumer protection is not antipathy for business growth; rather, it fosters the development of confidence and trust among consumers.
