- RBI Ombudsman Scheme
- Archival Policy
- Client Data Security
- Policy on Grievance Redressal Mechanism
- Code of Practices & Procedures
- Client Protection Principles
- Code of conduct for MFI’s in India
- Code of conduct for Board of Directors
- Corporate Social Responsibility Policy
- Fair Practices Code
- Loan Recovery Policy
- Non-Coercive Recovery Practice
- Nomination and Remuneration Policy
- Policy on Materiality of Transaction
- Process of Dealing With Clients
- Pricing Policy
- Related Party Transaction Policy
- Social and Environmental Policy
- Strategy for Multiple Lending
- Whistle Blower Policy
- Material Subsidary Policy
Client Data Security
As a part of our “Client Protection Principle” we are committed to maintain privacy of client data. Client documents/information are kept with security at every stage of loan processing, disbursement and during the tenure of the loan. Due accountability has been fixed with every employee who are responsible for collection of client data, documents, photographs etc. Following are the process of dealing with client.
Document security during sourcing and disbursement of loan.
During day 3 of the CGT we collect following proof of identities from each client.
- 5 photographs of the client and 1 photograph his/her spouse(of the 5 client photograph one each to be affixed in Loan agreement cum promissory note, Loan card, KYC form, Loan Proposal, Enrollment form)
- Voters’ Identity card. (mandatory)
- Ration Card, driving license, Passport (either one of these)
- In absence of Voters identity card and Ration card we collect domicile certificate certified by local elected representative for client and his/her spouse.
In no circumstances the concern CSO is authorized to collect additional proof of identity from the client. During the CGT process we educate the client on rational behind collecting the required documents.
During the “5 days-CGT” the concern CSO handling the center handles the client documents (the KYC form, CGT form, loan proposal form and the proof of identity as provided by the client) in his custody. Upon completion of CGT the CSO hands over the documents to the branch manager (BM). BM is responsible for the safe custody of all the client documents during the Pre-GRT and GRT.
Pre disbursement Client data transfer from branch to RO
Upon completion of CGT and GRT the completed set of document (KYC with photograph, Loan proposal with photograph, GRT form) goes to RO for data entry followed by Credit Bureau investigation. The same is usually transferred through the Branch Messenger or courier. The messenger/courier delivery person handover to the loan dossier to the Admin Officer of RO. Admin Officer acknowledges the receipt of all such documents.
The admin officer in turn handovers the document to respective Data Entry Operator (DEO) assigned to handle and manage the data/files and reports of the branch. Typically one DEO is responsible for the data entry and document management of 3 branches (1 territory). The DEO in acknowledged the receipt of documents from the Admin Officer.
One still safes (almirahs)/filing rack is assigned for every branch in region office. The key of the record room is in control of the MIS officer while the almirah key remains with the DEO. Only authorized person with permission from the Regional Manager can have access to client document.
After necessary data entry and check from authorized Credit Bureau the branch confirms about the approval status of the loan to the branch. In case the loan is rejected the documents are stored in rejected file rack. In case clients demand return of their photograph and identity proof, with the permission from Regional Manager we refund the same to the clients.
Post disbursement document transfer from branch to RO
After the disbursement documents pertaining to the disbursal of loan consisting of loan agreement, sheet of disbursement, promissory note (with photograph) migrates from branch to RO. The documents come through the messenger or through courier. The Admin Officer acknowledges the receipt of all such documents while he handovers all such documents to responsible DEO of the branch. The DEO prepares the complete dossier center wise. The loan proposal of members of one center (consisting of 15 to 25 clients) remains one file while the files of all loan clients of a branch remains in one filing rack/safe with control key remains with the DEO responsible for the branch.
Authorized persons to access client data
Following persons are authorized to access client data upon approval from Regional manager, Zonal Manager, Vice president or COO.
- Internal auditors of the company.
- Company appointed external/statutory auditor.
- Representative from Credit bureau.
- Representative from Regulator (RBI)
- Management representative of the company.
- Bankers who have funded the loan or lending relationship with company.
- Investors and board of directors of the company
- Representative from MFIN or Sa-Dhan identified by senior management of the company.
The Regional Manager (RM) of the company is responsible for safe keeping of documents in the region and gives limited accessibility to the above mentioned representatives with necessary approval and instruction.
Documents of closed loan, non active loans, and rejected loans are kept separately and after expiry of stipulated time are destroyed completely.
Client Protection Principles
Smart Campaign worked on developing Client Protection Principles, along with Accion International and CGAP and came out with 7 Client Protection Principles. These principles are comprehensive and cover rights of clients of Microfinance Institutions. Satin has endorsed Smart Campaign and is committed to the objectives of Client Protection Principles .The seven Client Protection Principles are given as under:
- Appropriate Product Design and Delivery Channels: Designs products that are appropriate to client needs and do no harm. Seeks client feedback for product design and delivery.
- Avoidance of Over-indebtedness: Providers will take reasonable steps to ensure that credit will be extended only if borrowers have demonstrated an adequate ability to repay and loans will not put borrowers at significant risk of over-indebtedness. Similarly, providers will take adequate care that noncredit financial products, such as insurance, extended to low-income clients are appropriate.
- Transparency: The pricing, terms, and conditions of financial products (including interest charges, insurance premiums, all fees, etc.) will be transparent and will be adequately disclosed in a form understandable to clients.
- Responsible Pricing: market-based, non-discriminatory pricing. Efficiency is in line with its peers.
- Fair and Respectful Treatment of Clients: Staff of financial service providers will comply with high ethical standards in their interaction with microfinance clients, and such providers will ensure that adequate safeguards are in place to detect and correct corruption or mistreatment of clients.
- Mechanisms for Complaints Resolution: Providers will have in place timely and responsive mechanisms for complaints and problem resolution for their clients.
- Privacy of Client Data: The privacy of individual client data will be respected, and such data cannot be used for other purposes without the express permission of the client (while recognizing that providers of financial services can play an important role in helping clients achieve the benefits of establishing credit histories).
Non-Coercive Recovery Practice
- We choose the meeting/recovery place keeping in mind the convenience of our clients. In no case it falls beyond five hundred meter from the house of the farthest member. The place of meeting is easily accessible to the non members, guardians and husbands of the clients.
- We empower the center to be self disciplined from the date of formation to payment of last installment. The members themselves take care of any lapse in discipline including absence, late coming and/or non repayment of installment/s. Satin operation staffs play the role of facilitator and neither impose the client nor take any disciplinary action.
- We follow the spirit of “Grahaka devo bhaba” (customer is the god) and treat the customer with utmost dignity and respect. We maintain the standard practice of calling them “behenji” or “didiji” across the organization and across the board irrespective of the designation and functional responsibility of employees. Every time we visit the center or clients visit to office we greet everyone with smile and “namaskar”.
- In case of recovery of delinquent accounts our operation staffs visit the house of the clients only with proper consent and physical presence of their fellow group members who mutually share the joint liability with the default member. We visit the houses of delinquent clients only during the convenient day times and not in odd hours.
- In no case our staffs use coercive or abusive language which hurts the dignity, self respect and emotion of our clients. No strong arm recovery practices are followed in our organization.
- We put our best possible endeavor to educate and empower the clients through various social initiatives including literacy drive during trainings and center meetings, circulation of poster and pamphlets about their rights.
- We also have a dedicated grievance redressal cell which listen the complaints of clients about misbehavior or misconduct of any employees working in the field and resolve the issues within two working days.
We conduct customer satisfaction audit and social audit through independent market survey/market research agency and publish the report our website.
Process of Dealing With Clients at Each Stage of Default
Default: Dues not paid on scheduled date and times are treated as default/delinquent accounts however dealing with the delinquency may vary with the degree of criticality. Our approach to deal with delinquency as an issue is as following.
- Preventive measure
- Curative measure
Preventive Measure: We are strong believer of preventive measure of managing default risk. In order to insulate ourselves against default we take the following precautions.
- Ensure client participation: We learnt from our experience that there is direct co-relation between client participation in microfinance program and the issues of delinquency/default. Maximizing level of attendance in center meetings reduces the risk of default. Hence we encourage/motivate our clients to be part of every center meetings and there by enforce joint liability in its true spirit.
- Do the basics right: Proper client selection and weeding out clients prone to default is the key to mitigate default risk. Hence we give maximum emphasis to the process to client selection and sourcing. We follow triple filtration mechanism and each single client passes through three level of filtration (a) During CGT process by the CSO (b)During Pre-GRT by Branch Manager and (c) During final GRT by the Territory Manager.
- Mandatory Credit Bureau checking: All the clients appraised during the selection process are checked from industry recognized Credit Bureau and thereby reduce the risk of potential defaulting client who have negative credit history, very low or high level of income and default history with other micro finance institutions.
- Repeat and re-ensure joint liability in every single center meeting: The joint liability aspect of the group/center is re-ensured during every center meeting as the same is recited as verbal contract during the beginning and closing of the center meeting.
- Quick response to early symptoms: Our MIS generates granular and comprehensive reports of delay and default in payment. The daily reports are shared among all senior managements and any increase in non payment is immediately traced. Upon identification of any such issues the operation team works swiftly manage the risk before it becomes chronic.
- Center leaders workshop: In order to keep the clients motivated and inculcate sense of ownership within them we organize center leaders workshop where we re-ensure the discipline by re-ensuring our culture, practices and discipline. By doing this we mitigate the risk of default due to any mis-communication.
- Repetition of entire process in every subsequent loan cycle: We understand that the economic and social behavior of clients are dynamic and may undergo change in subsequent cycle. Hence we repeat the entire process of appraisal irrespective of loan cycle and thereby we reduce the risk of default.
Curative Measure: Despite our best effort to curb default before it buds, few clients may show deviant behavior either intentionally or due to stressed situation. Our approaches to deal similar issues are as following.
- First time delay and default: As mentioned earlier we give maximum emphasis on timely and high quality of center meetings. In case a client is not able to pay her installment due to valid reason (because of income stress or causality in the family) we try to understand the exact nature of the CSO is expected to understand the exact nature of the problem. In case of genuine distress in the family the CSO is expected to behave in an empathetic manner. The CSO is expected to help the client in distress by motivating her fellow members and show the sign of group solidarity.
- Level one motivation by CSO: In case the clients are not self motivated to help their fellow member the CSO motivates the center further by ensuring joint liability.
- Level 2 motivation by BM: In case the CSO fails to recover the due by ensuring joint liability he calls up the Branch Manager to address the issue by visiting the center immediately. Till the time the Branch Manager reaches the center the CSOs keeps the center motivated and engaged. The branch manager motivates the center and individual members with his expertise so that current date collection never becomes past due. He also educates the center on the benefit of on time repayment and thereby managing good credit track record.
- Level 3 motivation by Territory manager: In case a delay/default case is not shorted out in the same day at the level of CSO and Branch Manager the Territory Manager follows up on immediate next day. They study the exact reason of default and group dynamics. He may speak to the family member of defaulting clients, take help of other centers running in the village or engage elderly person/opinion leaders to ease out the process of recovery.
- Regional Manager level follow-up: In case the combined effort of CSO/BM/TM fails to yield any result to curb the delay/default the Regional Manager (RM) follows up the center with in maximum two subsequent center meetings. He uses his expertise to solve the matter by critically analyzing the effort put in by the operation team working under him. He prepares and presents the cases of overdues during the monthly meeting of operation leaders. In case the default is due to any kind of severe stress or causality within the family of borrower and the same is not being resolved by using peer pressure/joint liability, the RM recommend the case to his seniors to grant some more time for . But technically there is no re-scheduling of loan happens.
- ZM/AVP/VP level intervention: The senior member of the operation “the Zonal Manager/AVP/VP” observe and assess the case based on the criticality and recommend it to the Chief Operating Officer (COO).
- Intervention by Chief Operating Officer (COO) In case the client is willing to pay but in need of more time/lean period the same is considered appropriately by the COO and reasonable time is given to the borrower. However there is no provision for re-scheduling the loan in the system or no fresh agreement gets executed to with the defaulting client. It shows as overdue account in the system as well as company books of accounts.
- Written intimation: Incase overdue cases are not resolved even after continual follow up and client motivation, written notices are issued to some clients selectively.
- Provision of Bad-debt and write up: Company maintains a reasonable provision to write up bad debts and doubtful assets as per the regulatory requirement. The senior management reviews the portfolio performance periodically and writes up non performing accounts. However the written off loans are also followed up sincerely by the operation team.