> Posted by Center Staff

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On Tuesday, the Smart Campaign recognized five Indian financial institutions with Smart Certification, acknowledging their high standards of client care: Arohan, Grameen Koota, Janalakshmi, Sonata, and Utkarsh.

The Smart Campaign’s Client Protection Certification Program contains a core set of standards against which institutions are evaluated by independent, third-party evaluators. Smart Certification publicly recognizes institutions providing financial services to low-income clients with a standard of care that upholds the microfinance industry’s seven Client Protection Principles. The Principles cover such critical practices as transparency, fair and respectful treatment, responsible pricing, and prevention of over-indebtedness. This is the third year in a row that the Campaign has recognized Smart-Certified Indian institutions at the annual Inclusive Finance India Summit in New Delhi.

Arohan Financial Services is a Kolkata-based MFI operating in five states and serving over 400,000 clients. Grameen Koota serves more than 673,000 rural clients through 222 branches located across the country. This is Grameen Koota’s recertification, as it was first Smart Certified two years ago, and through a recertification check-in, it has been able to extend the validity of its certificate for two years. Janalakshmi Financial Services is India’s largest urban microfinance organization, operating in 15 states through 229 branches, and has recently been awarded a Small Finance Bank licence by the RBI. Based in Lucknow, Sonata Finance has become one of the fastest-growing NBFC MFIs in northern India, with a network of 162 branches. Utkarsh Micro Finance serves over 170,000 clients through 92 branches in the northern states of India and has also recently been granted a Small Finance Bank license.

These client protection certifications are taking place in an Indian financial inclusion landscape that is undergoing rapid change – and a time to remain vigilant regarding client risks. The introduction of small finance bank and payment bank licenses promises to change the landscape significantly. Moreover, with the microfinance sector growing rapidly again – as fast as 56 percent in a year – there are some concerns about a return to an overheated market. One of the bright spots in the picture, is the expansion of services in states that have been less well served, particularly in the north of the country.

Forty-four financial institutions around the world have now been Smart Certified. Collectively, they serve more than 22 million low-income clients.

During the Smart Certification award ceremony, Larry Reed, Director of the MicroCredit Summit Campaign and Smart Campaign Steering Committee Member, remarked: “Certification represents an organization’s commitment to make sure they don’t just sign codes of conduct but that they also implement them – all of their employees are following through on the codes… My congratulations to these five organizations for the great example they are setting for this industry, especially here in India where we have so many new players coming into the market. It’s important that these microfinance organizations set the standards that others will follow.”

More information on the Client Protection Certification Program can be found here.

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