Paper

Responsible Finance Forum: Summary Report

Proceedings from the "Responsible Finance Forum: Role of investors in promoting responsible finance"
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This report summarizes key points from plenary sessions and workshops of the second Responsible Finance Forum that was organized by the Dutch Ministry of Foreign Affairs.

Recent microfinance crises demonstrate the need for appropriate products, practices and policies to protect and positively impact the end-users of microfinance. Multiple lending and client over-indebtedness issues are arising in the microfinance sectors of Bosnia and India, as microfinance becomes more competitive. Very high MFI growth targets, aggressive competition, erosion of credit quality standards combined with limited products, lack of transparency, weak credit information sharing framework and inadequate regulation contributed to the crises in these markets.

The report states that shareholders and investors need to support MFIs to have a long-term vision of sustainable service delivery to clients. The forum focused on:

  • Motivating and reinforcing initiatives by retail microfinance providers and networks through investors’ pro-active efforts for responsible finance;
  • Motivating investors to integrate responsibility towards microfinance end-users in their decision-making and business models;
  • Ensuring that financial access is provided in a healthy and responsible manner.