Social Performance Management in India: Seeking a Market-led Approach
This note establishes the relevance of social performance management to Indian microfinance and advocates a client-centric approach.
The article observes that the rapid expansion of Indian microfinance markets and increased competition in the sector have created several financial and social problems and risks. These include multiple borrowing and client indebtedness, mission drift, instability due to India’s volatile political climate, lack of transparency and insufficient grievance resolution mechanisms. In this context, the article highlights the need for social performance management (SPM) strategies to balance financial and social goals of microcredit institutions.
The article draws benefits and applications of a market-led approach to SPM from success stories of various Indian MFIs. They include:
- Greater focus on client needs as well as social and financial goals;
- Client-responsive products leading to client loyalty;
- Greater employee satisfaction and retention;
- Better portfolio quality and reduction in client indebtedness;
- Overall improvement in performance.
