Rural Finance Practitioner
There are many institutions that claim to be client centred and client focused but that is rarely visible on the ground. What I am saying is that there is a huge difference between intended visions (strategy) and realised actions (implementation on the ground). To understand this and various issues related to the present micro-finance crisis, I spoke to some front line and other staff in Indian MFIs and here is what they said (quoted verbatim and after translation in some cases) - I am merely sharing what I learnt to provide a staff perspective on the various happenings. Often times, staff have been blamed a lot for the present crisis but they too have a perspective and their side of their story...Read on...
Staff A – Field Worker in an MFI: The client focused vision is just for speaking at conferences and meetings. What happens on the ground is total different and we, the field workers bear the brunt. We are told to disburse, disburse and disburse so that targets are met, week on week, month on month and quarter on quarter – I have had senior branch and regional managers telling (and yelling at) me (during meetings) - Do whatever you have to but make sure that Y number of clients are enrolled and given loans in this period.
Staff B – Field Worker in an MFI: Who says that incentives systems based on disbursements do not exist. They do in reality, even if not shown on paper and I and several of my fellow colleagues have made a lot of money through disbursement incentives. In fact, there are also repayment incentives and that is why we have to be tough with the clients, under certain circumstances. Sometimes, I feel that we are caught - in between our MFI supervisors/bosses who want us to meet targets and recover at any cost and opportunistic clients who take every loan that comes their way but cannot repay after a certain level. We get shouted at by both groups of people as well...under these circumstances, client driven micro-finance is not possible to implement…
Staff C – Field Coordinator in an MFI: Initially clients used to be reluctant to take additional loans and I have personally coaxed them to do so, citing the benefits of taking an additional loan. I have even bought and given mobile phones to my clients from loan money and given the rest as cash to them...Now, the very same clients tell me that since they did not ask for the extra loan, they cannot pay back all loans together...as it is very difficult...the irony is that they now even ask for additional loan to pay back the earlier loans...the tables are turned now…and we are at their mercy…today
Staff D – Branch Manager of MFI: The pressures on me are so high and it is impossible to move at the very fast pace of growth all the time – I worry what will happen if people do not pay back loans as I know their income stream is weak and unpredictable. I am even more worried because my superiors perhaps understand the real situation and yet want me to disburse– this is a time bomb that is ticking away...
Staff E – Branch Accountant in MFI Branch: Zero PAR is the most important criterion on which our branch is judged and that is why all/most of our branch staff go to the any defaulting/ potential defaulter’s house on the same day and try and get the payment. To us, ZERO PAR is simply about ensuring 100% on-time repayments always and if we cannot get it from clients, we have to make over the delinquent payment from our resources and then recover from clients. Our institution will not accept anything less than 100% on-time repayment and our incentives are tied to not only loan disbursement but also 100% on-time recovery…we cannot afford to be client driven therefore…
Staff F – Former Field Worker in an MFI: It is great to talk about client oriented or client focused micro-finance but how to ensure its implementation on the ground? The performance targets and all other targets are numbers based – faster disbursement, more loan disbursement, 100% on time repayment and such factors. When this is the case, client relationships will naturally suffer and we cannot be doing things in client interest as we are minimising our contact with them to ensure that things get done efficiently and faster and we even did process mapping recently to reduce our lead time for loans. In fact, the past good relationship built with some clients may also be lost as, in the name of efficiency, we are literally running from one place to another disbursing, collecting, disbursing etc
Staff G – Former Regional Manager in an MFI: Post Krishna crisis, the same issues were discussed and many MFIs said that they would focus on the people but see what happened? Code of conduct documents were said to enhance client focus but they hardly got implemented on the ground. In reality, we are doing non-client oriented things that we were always doing - yet we are claiming to be working on client focused micro-finance.
Staff H – Former in House Trainer in an MFI: Self-regulation does not work on the ground…it can work on paper as enforcement is very difficult because of conflict of interest. There is so much of conflict of interest everywhere – for example, I am the CEO of my MFI, I sit on the Board of the MFI association, I am vice president of local chapter, and aspire to be its chairperson, I am on the board of the national banks/international micro-finance bodies and I or my friends are everywhere – So, no one can question me… and when I set this example, enforcing self regulation becomes a very difficult task and that is why the client oriented micro-finance promised in 2006 did not and will not take off…
Staff I – Former Branch Manager in an MFI: It is impossible to have client focused micro-finance without understanding the livelihood situations. And we are not anywhere close to understanding this…without serious livelihood financing…we cannot achieve client focus and be client oriented…so the fundamental micro-finance approach has to change and in favour of livelihood financing…to reduce vulnerability of low income people and enable them to tap economic opportunities in a better manner. Only then can we truly bring in client focused micro-finance…
Therefore, all concerned stakeholders including MFIs must introspect with integrity and try to build a good balance between traditional performance – i.e., so-called efficiency inducing processes, burgeoning growth patterns, enhanced returns and related issues – and client oriented performance measures. However, this cannot simply happen at the superficial level whereby so-called social performance management measures are just included - undoubtedly, the client related issues must AGAIN (they were when micro-finance started out originally) become an integral part of the whole micro-finance delivery process and through that get reflected in performance appraisal, measurement and reward systems in micro-finance (for various stakeholders). When this happens in totality throughout the micro-finance industry, then, we can perhaps see intended strategies being implemented on the ground…and client focused micro-finance really taking shape…
Please look out for the next post - “Should Indian MFIs Receive Priority Sector Funds: A Critical Analysis” – 30th December 2010
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