Social Investor Meeting on Responsible Inclusive Finance Customer - PowerPoint PPT Presentation

Social Investor Meeting on Responsible Inclusive Finance Customer Centricity Learning Event Chennai, India Monday February 19, 2018

Agenda • 11.00-11.10: Welcome and Updates • 11.10-11.40: Understanding the risk for over-indebtedness in India • 11.40-12.20: Implementing the Universal Standards in India • 12.20-13.00: Responsible Exits • 13.00-14.00: Lunch • 14.00-14.30: SPI4 and ALINUS • 14.30-15.00: Update on lender guidelines monitoring in Cambodia • 15.00-15.45: Assessing S&E performance of SME finance • 15.45-16.00: Coffee Break • 16.00-16.45: Digitalization & Fintech • 16.15-17.00: Data Platform • 17.00-17.45: Aligning efforts with the impact investing field • 17.45-18.00: Wrap up and conclusions

Welcome • One of the most active working groups of the SPTF.. • …with a growing number of investors joining and committing to our shared objectives - ~ 400 members from 133 organizations . • We work together to advance responsible investment in inclusive finance. Together, we: ▫ Raise awareness and create ownership among investors of ongoing initiatives and developments in SPM ▫ Identify areas of concern in responsible inclusive finance ▫ Take collective action in areas where it can help the market develop in a positive and unified direction 3

Current priorities of the SIWG 1. Harmonizing investor due diligence and monitoring on social performance through the common tool of SPI4 ALINUS 2. Evaluating client protection risks in fintech investments during due diligence and ongoing monitoring (CDC-SPTF fintech webinar series) 3. Aligning efforts with the broader impact investing sector , particularly related to accelerating impact measurement and management (WEF, GIIN, IMP, UNPRI) 4. Assessing S&E performance of SME finance 5. Other areas of priority include preventing over-indebtedness (guidelines and MIMOSA), managing social outcomes (outcomes working group), harmonizing loan agreement covenants (“reasonable covenants”), pricing transparency ( data platform ), and responsible exits We’ll be discussing updates on most of these today 4

In-person meetings: 2x a year • 2017: Zurich (March), Mexico (May) • Next meeting in 2018 likely to take place in June in Luxembourg • We also meet several times throughout the year via webinars in areas of common interest to group members 5

Sign up to become an organizational member • Being 100% donor-dependant is no longer an option • SPTF recently introduced a new fee-based organizational membership model • Thank you to Oikocredit, Grameen Credit Agricole Foundation, Symbiotics that recently became organizational members • Your organization will be receiving an invoice very soon • To sign up visit https://sptf.info/about- us/membership • For questions contact membership@sptf.info 6

Agenda • 11.00-11.10: Welcome and Updates • 11.10-11.40: Understanding the risk for over-indebtedness in India • 11.40-12.20: Implementing the Universal Standards in India • 12.20-13.00: Responsible Exits • 13.00-14.00: Lunch • 14.00-14.30: SPI4 and ALINUS • 14.30-15.00: Update on lender guidelines monitoring in Cambodia • 15.00-15.45: Assessing S&E performance of SME finance • 15.45-16.00: Coffee Break • 16.00-16.45: Digitalization & Fintech • 16.15-17.00: Data Platform • 17.00-17.45: Aligning efforts with the impact investing field • 17.45-18.00: Wrap up and conclusions

Agenda • 11.00-11.10: Welcome and Updates • 11.10-11.40: Understanding the risk for over-indebtedness in India • 11.40-12.20: Implementing the Universal Standards in India • 12.20-13.00: Responsible Exits • 13.00-14.00: Lunch • 14.00-14.30: SPI4 and ALINUS • 14.30-15.00: Update on lender guidelines monitoring in Cambodia • 15.00-15.45: Assessing S&E performance of SME finance • 15.45-16.00: Coffee Break • 16.00-16.45: Digitalization & Fintech • 16.15-17.00: Data Platform • 17.00-17.45: Aligning efforts with the impact investing field • 17.45-18.00: Wrap up and conclusions

USSPM Dimension 5: Treat Employees Responsibly Some observations on MFI Practices in India SPTF Social Investor Working Group February 2018 Frances Sinha & M-CRIL team www.m-cril.com

M-CRIL v Engaged with microfinance since 1998 v Now merged with EDA – training, research, social businesses Ø 2017 ADB equity investment; strengthens our work in microfinance and other sectors across Asia Ø Offices outside India – in Myanmar, Cambodia Ø In India: Applying for Rating license from RBI – to be recognized by banks in India. Fewer ratings, more Client Protection Certifications, Code of Conduct Assessments, Loan Portfolio Audits, Third Party Evaluations M-CRIL M-CRIL

Observations overall – India context Ø Formal Banking o Distanced from low income people o Labour unions seen to be self-serving, disruptive, (and public sector – politicized) Ø MFIs o Close to target market – low income people o Margin cap; drive for operational efficiency: staff are the major operational expense – but sometimes very high compensation to CEOs/senior management o Differences: geography (north vs south; urban vs rural) , size (Tier 1 = >250,000 clients, vs Tier 2/3) M-CRIL

Observations overall – MFIs Ø MFIs contd. o Field staff often recruited from same background as clients; school leavers (class 10/12) o Common policy that local staff are not posted in their home area; rotated across branches every 6 months (fraud mitigation) o Work requires early start to working day, mobility (motor bike) o These are reasons for low % women field staff Ø Sector concerns since 2010 – client protection; less attention to staff protection, though recognition of HR issues, having an HR policy M-CRIL

USSPM 5 - summary South South East Inde Asia Asia Number of FSP 5 16 28 DIM 5: TREAT EMPLOYEES 84% 83% 70% RESPONSIBLY 5A - HR policy 79% 81% 68% 5B - Communication of 95% 88% 78% terms of employment 5C - Employee satisfaction 77% 79% 63% Source: CERISE SPI-4 Benchmarks, Feb 2018 4 Urban, 2 Tier 1, 2 headquartered in S India 13

The high flyers Recognised as among top ‘best companies to work for’ in India, past 3 years and more: v Ujjivan v Equitas v Bharat Financial Inclusion (prev. SKS) What do you think about this? Tools applied: Trust Index - quality of employee experience Culture Audit - evaluates people practices Do we need such tools to reinforce USSPM 5? M-CRIL

EP 5A.1. HR Policy/Employee Rights • No field staff back up – so • Most MFIs have an HR policy – long working hours; Sunday a available at branches; updated training day; holidays not via circulars; given easily • Specify standard working hours/holidays • Very basic accommodation, questionable - ventilation, • Accommodation (and food) is lighting, hygiene provided to staff at the branch • Women field staff – 0-22% • Women board members – 0/1-4/5 M-CRIL

EP 5A.2. Staff compensation • Staff awareness of salary • High incentives for growth structure is high making a comeback • High targets for LOs set immediately after LO induction Benchmark by minimum wage – • Performance evaluations appropriate? often based only on targets LOs: Other comparable industries provide better monetary compensation and reduced working hours to candidates of similar background Outstanding Issue of CEOs/senior staff: field staff pay (USSPM6) M-CRIL

EP 5A.3 Staff complaints • MFIs have systems in place • Tier 2/3 MFIs lack multiple channels that work effectively and maintain confidentiality; affects staff confidence in system – seldom complain M-CRIL

EP 5A.4 Staff Health and safety • Shift from cash collections by • Review of staff health risks – staff – because of security limited to road accidents and concerns wearing helmets • Nearly all MFIs provide private • Risks and incidents not health and life insurance for reported to staff Board/Management Committee M-CRIL

EP 5B .1 Job description/performance evaluation Tier 2/3 MFIs: • MFIs provide written • Criteria for promotion not contract letters that clearly defined contain JD or reference to • HR staff mostly perform it. only admin tasks related to • Most staff are well aware HR of their roles and responsibilities M-CRIL

EP 5B.2. Staff training/skill development • Promotions (field level) - • At least a one week few FIs train on soft skills induction program for new (e.g. leadership) employees • Performance appraisals and • Task related refresher training needs not linked trainings provided regularly M-CRIL

Proj oject update Fe Feb 2018 2018

Publications to date Jordan Apr 2018 En Nicaragua Mar 2018 En, Sp India Uttar Pradesh Feb 2018 En Maharashtra Tamil Nadu Morocco Jan 2018, Dec 2015 En, Fr Country reports Kyrgyzstan Aug 2017, Nov 2015 En Cambodia Nov 2015, May 2016 En Bolivia Dec 2015 En, Sp Peru Jan 2016 En, Sp Azerbaijan Apr 2016 En Senegal Sep 2016 En, Fr Circulars Cambodia Jun 2016, Dec 2016 En 22 Apr 2017

Su Subsc scrib ibers ca can no now ac access all all reports on Micr crofinance ceReports.com 23 Apr 2017