Microfinance Monitor, March 11, 2010: To enhance responsible lending and institutionalise information sharing process, 31 NBFC – Microfinance Institutions have formed into Microfinance Institutions Network (MFIN), a self-regulatory body of NBFC MFIs to work with regulators to promote transparency in microfinance lending and to achieve their ultimate mission of financial inclusion.

MFIN arm Alpha Micro Finance Consultants P Ltd (Alpha) that was set up recently has invested Rs. 2 Crore in setting up a credit bureau to improve credit risk management within the sector and ensure multiple borrowing and check over indebtedness. This will reduce the risk of MFIs which have to extend loans to customers without adequate information about their indebtedness. MFIN will work closely with the government credit bureau CIBIL and also High Mark, enabling all members of MFIN to contribute data to these credit bureaux.

MFIN has also defined a Code of Conduct which focuses on fair practices with borrowers including promoting transparency, fixing overall lending limits at client level, data sharing, recruitment practices, whistle blowing and enforcement mechanisms. Members have committed to communicate interest rates on reducing balance method and other charges clearly to members while following fair recovery mechanisms.