On the basing of interactions with the members, Microfinance Institutions Network (MFIN) has issued an advisory to its Members pertaining to important steps to be kept in consideration while engaging with borrowers after the moratorium ended on 31 August 2020. The detailed advisory is a reiteration of points included in Industry Code of Conduct and Code of Responsible Lending namely fair interactions with borrowers, ensuring transparency, training for employees engaging with borrowers, among several others and also covers safeguards for 1.
MFIN Members are RBI-regulated entities such as NBFC-MFI, Banks, Small Finance Banks, Business Correspondents and NBFCs that offer microcredit to low income households. With COVID 19 hampering the livelihood of these BOP borrowers, the RBI had launched an initial Moratorium till 31 May 2020 and later extended it for three more months till the 31st August 2020.
Dr Alok Misra, CEO and Director, MFIN said, “This is an extremely critical time for all of us and we need to tread carefully. While the moratorium is ending, there could be borrowers who might be facing stress. All providers agree that we must continue to show empathy with these borrowers and allow them time to get on their feet, even though credit discipline is important. Simultaneously, we need to handhold those who availed the moratorium and are willingly to repay with relevant documents; revised loan card, accrued interest amount, changes in repayment amounts, schedule, tenure, among others.”
Dr Misra further added, “While a lot of points mentioned in the Advisory are a part of the Code of Conduct and the Code of Responsible Lending, it was felt important to reiterate them so that the industry collectively ensures that customers’ interests are protected. In this context, training of employees on customer interactions will become exceedingly important. Feedback from field indicates resumption of economic activity and demand for credit from clients.”