Social Audit by Networks

Sa-Dhan, India

MFI Stakeholders’ Concerns & Social Performance

MFI

Clients

Govt. agency

Client protection

InvestorsAsset Size, Quality &

Client Relation

Rating AgencyFinancial &

Client satisfaction

BanksAsset size, Quality &

Client

Relation

RegulatorTransparency,

efficiency & client relation

Political Parties

Client protection

All Client Focused

Social Performance

Effective Translation of MFI Mission into practice…

SP is all about the result …

SPM is about the system, people, process etc in MFIs to achieve SP

Intent & Design

Internal systems & Activities

Output Outcome Impact

SPM SP

SP Continuum

Social Audit / Social Rating

Why Networks to do Social Audit/Social Rating

Networks must help MFIs to ‘MANAGE’ their Social performance..because SP is NOT AUTOMATIC.

Networks need to ‘MEASURE’ the measures taken by their MFIs to manage their Social Performance

The Networks need to ensure that their MFIs are SOCIALLY RELEVANT and that

they PERFORM WELL on that front

Social Audit /Rating helps the Networks to gauge how their MFIs ‘MANAGE’ SP

Social Audit vs Social Rating Social Audit Social Rating

Normally Not Graded –Not Public Public- Can be published

Towards Improving Practice Opinion on Existing Practice

Guided Self evaluation Independent Evaluation

Gauging Internal Strength & Weakness Assessment by Externals- Investors/Donors

Good for MFIs at all stages Better for MFIs with established SPM

We Underwent SA- raining

The Audit Tool –SPI ( CERISE)

TARGETING & OUTREACH

PRODUCT & SERVICES

BENEFITS TO CLIENTS

SOCIAL RESPONSIBILTY

Geographical Targeting ( 5)

Individual Targeting ( 6)

Pro-poor Methodology (6)

Range of Traditional Services (7)

Quality of Service (6)

Innovative & Non Fin. Services (6)

Economic Benefit to clients ( 7)

Client of Participation ( 6)

Social Capital / Client Engagement (4)

SR to Employees (7)

SR to Clients (6)

SR to Community & Environ (4)

A tool with 4 Dimensions, 12 criteria and 70 sub indicators

Sa-Dhan Team Held the Social Audit

Exercise in Varanasi, North

India

Audit Exercise – Documents perused1. Board Composition2. Board Resolution3. General Body Resolution4. Annual Reports & Financial statements5. Product Description –Circulars6. Client Targeting Tool used7. Non-Finance Services – Description8. MIS and Company consolidated Reports9. Business Plan10. Code of conduct Documents11. Loan Card & Pass Book12. Loan Manual13. Client Survey Results

 

SPI Results 70 / 100                                      

Targeting the poor and excluded *** 25 24 Adaptation of services *** 25 15 Benefits to clients ** 25 14 Social responsibility *** 25 17

       

Geographic Targeting 9 9 Range of traditional services 7 3 Economic benefits 8 6 SR to employees 9 7

1.1 Areas of intervention 2 2   2.1 # of loan products 1 0   3.1 Tracking changes in client situation 1 1   4.1 Salary scale 1 1

1.2 % of branches from underdeveloped areas 2 2   2.2 Emergency loans 1 1   3.2 Staff training in social performance management 1 0   4.2 Permanent contracts 2 2

1.3 Verification of poverty level 2 2   2.3 Loan tailored to social needs 1 1   3.3 Social performance appraisals 1 1   4.3 Access to training 1 1

1.4 % of clients in rural areas 1 1   2.4 Loans tailored to productive needs 1 0   3.4 Corrective measures 1 1   4.4 Participation in decision making 1 0

1.5 Service in areas with no other MFIs 2 2   2.5 Local adequation of services 1 0   3.5 Reducing costs strategy 1 1   4.5 Health coverage 1 1

          2.6 Saving products 1 1   3.6 Formal benefits policy  2 2   4.6 Specific policy for woman staff 1 1

          2.7 Saving tailored to social needs 1 0   3.7 Measures in case of collective disaster 1 0   4.7 Staff rotation 2 1

                                     

Individual targeting 10 10   Quality of services 9 7   Client participation 9 2   SR to clients 9 9

1.6 Tool for targeting of poor clients 1 1   2.8 Decentralization 1 1   3.8.a Decision making at the client level 1 1   4.8 Avoiding over-indebtedness 2 2

1.7 Ensuring adequate use of targeting tool 1 1   2.9 Timely delivery 1 1   3.8.b Decision making at the board level 1 0   4.9 Cost transparency 2 2

1.8 Targeting incentives 2 2   2.10 Interest rate 2 2   3.9 Representation of clients in committees 1 0   4.10 Credit conditions and collection practices 2 2

1.9 % of poverty of new clients 2 2   2.11 Feedbacks from clients 2 2   3.10 Involvement of clients at the management level 1 1   4.11 Code of conduct 1 1

1.10 % of woman clients 2 2   2.12 Client retention rate 2 1   3.11 Women representation 1 0   4.12 Grievance procedures 1 1

1.11 % marginalized clients 2 2   2.13 Study on drop outs 1 0   3.12 Training of representatives 2 0   4.13 Client confidentiality 1 1

                    3.13 Effectiveness of participatory bodies 2 0          

                                     

Pro-poor methodology 9 5 Innovative and non financial services 9 5 Empowerment 8 6 SR to community and environment 7 1

1.12 Unsecured loans 2 2   2.14 Innovative services 2 1   3.14 Problem solving beyond financial services 2 2   4.14 Social responsibilities to the community 2 1

1.13 Altenative collateral for productive loans 1 0   2.15 Mobile services 2 1   3.15 Woman empowerment 2 1   4.15 Local social and economic development 1 0

1.14 Small loans 2 2   2.16 Strategic alliances 1 1   3.16 Transparency to clients/members 2 2   4.16 Environment policy/financed activities 2 0

1.15 Small installments 1 1   2.17 Management NFS 1 0   3.17 Support for client influence 2 1   4.17 Environment policy/MFI activities 2 0

1.16 Small saving amounts 1 0   2.18 Social NFS 1 1                    

1.17 Cross-subsidization 2 0   2.19 Adaptation of NFS to clients' needs 2 1                    

Final Score Sheet – An Excel Sheet

 

 

Targeting the poor and excluded ***

Adaptation of services ***

Benefits to clients **

Social responsibility ***

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Result Graph on the MFI Audited

4 Dimensions

Targeting the poor and excluded ***

Adaptation of services ***

Benefits to clients **

Social responsibility *** 0%

50%

100%

4 Dimensions in Diamond Graph

Results on the Criteria

0%10%20%30%40%50%60%70%80%90%

100%

The Criteria Results recast

Geographic TargetingIndividual targeting

Pro-poor methodology

Range of traditional services

Quality of services

Innovative and non financial servicesEconomic benefits

Client participation

Empowerment

SR towards staff

SR towards clients

SR towards community and environment

0%

50%

100%

Social Audit ImplicationsSocial Audit

Results

CorrectivePromotional

+ ve Results Not so + ve Results

Feedback

Supportive policy & Good will Self correction for better SP

Govt. Regulator Media MFI

Advocacy

In Essence…

Social Audit for Networks is what

Stethoscope for a physician

Networks can easily install Social Audit system

Social Audit Results could aid nurturing socially responsible MFIs and sector

Thanks Natarajan , Sa-Dhan