Shankar Man Shrestha, Motivating Your Board of Directors to Actively Promote and Deepen Your Social Mission

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Shankar Man Shrestha, Motivating Your Board of Directors to Actively Promote and Deepen Your Social Mission

  1. 1. Presented byShankar Man Shrestha CEO, RMDC Nepal
  2. 2. Current Environment of Microfinance Microfinance is established as a glorious phenomenon all over the world Globally 135 million poor families have been benefitted from microfinance services The world community has a great expectation from it There was substantial evidences of microfinance being an effective tool of poverty alleviation It has been proved as a sustainable operation Continue…
  3. 3.  The efforts of MC Summit Campaign and Nobel Laureate Prof. Mohammad Yunus have made a great contribution to taking it to a remarkable height and get it popularized all over the world In about 13 years, the outreach of microfinance has grown 18 folds A huge funds of governments and non government and private agencies have been mobilized to support microfinance and related activities Continue…
  4. 4.  MF has got professionalized and has been a centre of attraction for almost all kinds of people from all walks of life such as academics, researchers, elites, practitioners, investors, philanthropist However, lately questions have been raised on the effectiveness of microfinance operations in achieving social mission and the integrity of practitioners In many countries, microfinance practitioners are being criticized as the blood suckers, shylocks, exploiter, opportunists and so on specially after Andra episode in India
  5. 5. Emerging Challenges Mission drift - moving away from the poor. Too much commercialization Multiple financing by MFIs Over indebtedness / misuse of resources Board governance getting aloof from social mission Practitioners are motivated towards making more and more profit Increased social distortions among clients Continue…
  6. 6.  Borrowers getting displaced from their native places for their failure to repay loans Lending as well as reputation risks are on increase MFIs following irresponsible practices Degradation of portfolio quality Increasing drop out of clients from program Deteriorating staff behaviour Widening gap between poor and rich
  7. 7. Reasons Behind the Problems Lack of clients orientation and sensitization on over indebtedness and the risk involved Lack of knowledge about clients Deviation from best practices norms and adoption of irresponsible practice Negating essentials of microfinance Lust for power and money Irresponsible policy and management Inadequate staff orientation and training on social mission Continue…
  8. 8.  Poor communication of MFIs officials with local community Lack of self regulation as well as external regualtion Discarding best practices norms Board members’ failure to understand the underlying principles of microfinance Over ambition of private investors Overriding of social mission and responsibility Inclusion of non-poor
  9. 9. Way Forward for BoD and Investors BoD should strongly come up with commitment for social mission and undertaking following actions:- Have a CEO with commitment to achieve social mission and financial sustainability Design MF policy strictly targeted at the poor and vulnerable Orientate staff on serving the poor and the vulnerable Continue…
  10. 10.  Design loan size suited to the needs and capacity of the poor Stop multiple financing Promote financial literacy among clients Encourage Savings from Clients Serve graduated clients differently commensurating with their increasing need and capacity Continue…
  11. 11.  Visit clients to know them well Organize public audit in program areas for assessing impact and feedback from community Employing self regulation for achieving social as well as financial missions
  12. 12. Thank You !

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