Mumbai: In a bid to institutionalise the process of credit information sharing, 35 non-banking microfinance institutions including the top 10, have come together to set up a self-regulatory Microfinance Institutions Network (MFIN), that aims to work with regulators to promote microfinance to achieve larger financial inclusion goals.

These institutions represent almost 80 per cent of the entire microfinance sector in the country

MFIN members have invested in Alpha Micro Finance Consultants P Ltd (Alpha), which in turn has invested Rs2 crore in setting up a credit bureau to help improve credit risk management within the sector to check multiple borrowing and over indebtedness, as MFIs often end up aving to extend credit to customers with inadequate information on their history of indebtedness.

Philanthropic investment firm Omidyar Network is funding the project to support MFIN's objectives, while the commercial lending arm of the QWorld Bank, IFC is providing advisory services and technical consultancy to Alpha in its effort to enable the MFI sector acces to credit bureau services.

Working with CIBIL and High Mark and enabling all members of MFIN to contribute data to the credit bureau would allow MFIN members to ascertain the overall indebtedness of clients and ensure they have repayment capability before extending credit to them.

MFIN has also defined a code of conduct focusing on fair lending practices with borrowers including promoting transparency, fixing overall lending limits at client level, data sharing, recruitment practices, whistle blowing and enforcement mechanisms.