Objectives: This paper examines what microfinance companies are doing to protect their clients –mostly women belonging to weaker sections -from mis-selling, over indebtedness and unfair practices.
Methods/Statistical Analysis: The study is based on annual reports produced by 49 microfinance institutions belong to Microfinance Institution Network (MFIN) an interview of 355 microfinance in Alwar, Rajasthan was conducted in 2015 and 2017. Focus group discussions were the main tool used to solicit views of microfinance clients.
Findings: The client grievance redressal mechanism available to microfinance clients is skewed in favor of the microfinance providers, who are members of MFIN. The Reserve Bank of India has recognized MFIN as the Special Regulatory Organization (SRO) to resolve all client complaints at its own level. Till now not a single adverse decision has been made by the Enforcement Committee of MFIN against any of its members for violating Code of Conduct or Fair Practices Code, which protects clients against lenders abuse. Unless RBI independently monitors the client grievance redressal work of MFIN, there is little hope that clients will receive justice which is without any reproach.
Application/Improvements: Microfinance clients should have recourse to third party dispute resolution, including Banking Ombudsman appointed by the RBI. Keywords: 5-6 words, Drawn from title, Word representing the work.