Impact of Code of Conduct Assessments

Between 2010 and 2014, over 100 Code of Conduct Assessments have been carried out by several agencies including M2i. The COCAs commissioned by SIDBI have been published on its website. Since these reports are in the public domain, there is increased focus on the part of MFIs to improve their operational practices. These reports also provide a repository of desirable and undesirable practices.

M2i’s COCA reports highlight best practices of MFIs on code of conduct dimensions. It also highlights undesirable consequences of undesirable operational practices such as indiscriminate application of joint liability and disproportionate staff incentives on disbursement of new loans.

Code of conduct assessments have led to significant improvement in operational practices of MFIs. Many MFIs have undertaken comprehensive review of their policies and intensive training of their field staff after undergoing Code of Conduct of Assessment.

Bandhan’s view on Code of Conduct Assessments The first ever Code of Conduct Assessment was performed on Bandhan by M2i in 2010. M2i again performed a Code of Conduct Assessment of Bandhan in 2012. Mr CS Ghosh, CEO of Bandhan, as quoted in Microfinance India: Social Performance Report 2013, says: "Third party CoC assessment establishes out good practice guidelines that better enable MFIs to face challenges of accessing long-term finance. The report benefits funders, investors, customers, owners, regulators and partner organizations. Investors use such evaluations as a second independent opinion for their investment decision– making processes. The CoCA helped us to judge (a) Extent to which policies and systems had been adopted and implemented in letter and spirit, (b) real status at the field, across several issues, (c) extent of client education efforts and whether results were commensurate, (d) unbiased view of staff performance and several operational aspects, which enhanced our confidence in our policies and systems."