As a partner of the most vulnerable sections of our society, Equitas recognizes the need to adhere to the highest standards of transparency in its operations.

While all microfinance institutions are rightfully proud of the impact they have made on millions of lives across the globe, Equitas believes there is scope for improvement in educating customers on the true cost of their micro-credit loans. MFIs tend to publicize their low flat interest rates, while the actual cost of the loan is enhanced by additional fees built into the loan product. As a result, customers may under-estimate the cost of their loans and may not be in a position to compare loan products provided by different MFIs.

In a heartening development this year, Chuck Waterfield launched the MF Transparency initiative to foster transparency among microfinance stakeholders by presenting information on credit products and their prices in a clear and consistent fashion. This initiative seeks to replicate the consumer protection norms introduced by the Truth in Lending Act in the US, which mandated the disclosure of the APR interest rate of the loan to their customers. It is essential that MFIs recognize the importance of transparency and switch to APR rates while communicating their interest rates to members.

Equitas has taken the lead in this initiative by printing its all-inclusive interest rate (equivalent to the US APR) in every member’s passbook – only MFI in India and probably the only MFI in the world to do so. In another first for Equitas, it printed its insurance administration fee similar to a commission on the life insurance policy note of its members.

As an additional mechanism to protect its customers, Equitas has appointed a member of its management team as the internal ombudsman. The contact number of this ombudsman is also published in every member’s passbook. This enables members to directly reach out to the management team to voice their grievances.

These initiatives have helped Equitas build a reputation of transparency in its first year of operations. Equitas is eager to further the cause of transparency across the industry. In order to take its transparency to the next level, Equitas proposes to explore an additional round of initiatives that will revolutionize corporate transparency within, if not beyond, the country.

Watch this space for updates on Equitas’ transparency initiatives.

For more information on the APR calculation method, please visit the MF Transparency website at http://www.mftransparency.org