Groundswell on Responsible Lending: Good Words, Uncertain Deeds

CGAP's ever-thoughtful Kate McKee blogs:

Traveling the Africa and Asia conference circuit over the past month, it’s striking how the issues of responsible finance and client protection are suddenly prominent wherever microfinance providers and financial inclusion policy makers, funders and observers gather....a surprising consensus has emerged around the need for action on multiple fronts, encompassing a range of responses from consumer education and financial capability, to regulation.So I’ve been putting microfinance leaders...on the spot, asking them to talk about the pressures that make providers cut corners and adopt less than fully-admirable practices.

She goes on to list the pressures they mentioned.The CFI blog recently reported that the MIX has released its first round of data on what microfinance institutions (MFIs) are doing to protect clients from over-borrowing and other credit dangers. We learn for example that "all MFIs reporting give their clients a chance to ask questions and get information before they sign a contract." It is encouraging that top-level leaders at so many MFIs are thinking about these issues. No doubt the survey and the related Smart Campaign are conceived to prod those leaders to emphasize these priorities even more as managers. So these efforts deserve applause.Of course, what happens out in the slums and villages where credit officers work will never line up exactly with official policy. What is actually going on is hard to know, and seems ripe for research. I think it matters a lot for the question of whether microcredit is empowering people.