MICROCAPITAL BRIEF: Opportunity Bank Serbia; MDO Arvand of Tajikistan; Bai Tushum, Kompanion of Kyrgyzstan Receive Smart Campaign Client Protection Certification

The Smart Campaign, a consumer-protection initiative launched in 2010 by the US-based nonprofit Accion, recently granted its “Smart Certification” to four microfinance institutions (MFIs): Opportunity Bank Serbia, which is controlled by US-based NGO Opportunity International; Microcredit Deposit-Taking Organizaition (MDO) Arvand, an MFI in Tajikistan that provides financial services to entrepreneurs; Bai Tushum Bank, a microfinance institution serving entrepreneurs in Kyrgyzstan; and Kompanion, an MFI that offers “development products and services”[1] to entrepreneurs and individuals in Kyrgyzstan.

The MFIs have received the certification for meeting “the Smart Campaign’s standards of care to implement all of the Client Protection Principles throughout their operations, product offerings, and treatment of clients”[1].

The Smart Certification process ensures that certified MFIs are evaluated independently by third party certification agencies according to a set of standards defined by the Smart Campaign. The Campaign promotes the following seven core client protection principles: appropriate product design and delivery, prevention of over-indebtedness, transparency, responsible pricing, fair and respectful treatment of clients, privacy of client data and mechanisms for complaint resolution [2]. The Smart Campaign certification process was co-funded by the World Bank Group’s International Finance Corporation (IFC) and the Global Social Investment Funds of Germany’s Deutsche Bank. Caroline Vance, Assistant Vice President of Deutsche Bank, explained that “the certification represents a rigorous standard of practice in customer protection, and we are highly impressed by the effort that these MFIs have expended toward achievement of this goal”[1].

A total of 18 MFIs have been certified by the Smart Campaign as of 2014.

By Alíz Crowley, Research Associate

About the Smart Campaign

The Smart Campaign, which was founded by US-based nonprofit Accion and is located at Accion’s Center for Financial Inclusion in the US city of Washington, is an “effort to unite microfinance leaders around a common goal: to keep clients as the driving force of the industry.” It promotes seven core client protection principles: appropriate product design and delivery, prevention of over-indebtedness, transparency, responsible pricing, fair and respectful treatment of clients, privacy of client data and mechanisms for complaint resolution. As of 2014, The Smart Campaign is endorsed by approximately 4,152 microfinance institutions (MFIs), microfinance support organizations, investors, donors and individual industry professionals. There are 18 MFIs certified by the Smart Campaign as of 2014.

About Bai Tushum Bank Closed Joint Stock Company

Bai Tushum Bank, formerly known as Bai-Tushum and Partners is a microfinance institution (MFI) based in the Kyrgyz Republic. Bai Tushum’s mission is to contribute to the economic development of the Kyrgyz Republic through the delivery of microfinance services that lead to increased employment and otherwise meet the interests of its clients and investors. Bai Tushum’s products include agriloans; trade, service, and production loans; mortgage loans; consumer loans; and equipment financing. As of December 2012, Bai Tushum Bank reported USD 101 million in total assets, a gross loan portfolio of USD 63.1 million, 26,500 active borrowers, 1,676 depositors with USD 1.8 million in total deposits, return on assets (ROA) of 4.20 percent and return on equity (ROE) of 31.21percent.

About Kompanion Financial Group Microfinance Closed Joint Stock Company

Kompanion Financial Group Microfinance Closed Joint Stock Company was established in Kyrgyzstan in 2004 through the consolidation of five microcredit agencies affiliated with Mercy Corps, an economic development and aid organization based in the United States. Kompanion describes itself as a “community development financial institution that seeks to combine conservation and development goals.” As of 2012, Kompanion reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 77.8 million, a gross loan portfolio of USD 54.9 million, return on assets (ROA) of 0.64 percent, return on equity (ROE) of 3.29 percent and 116,700 active borrowers. The institution does not accept deposits.

About Microcredit Deposit-Taking Organizaition (MDO) Arvand

Microcredit Deposit-Taking Organizaition (MDO) Arvand is a microfinance institution that was established in Tajikistan in 2002 by ACDI/VOCA (Agricultural Cooperative Development International/ Volunteers in Overseas Cooperative Assistance), a US-based nonprofit that promotes economic opportunity through cooperatives, enterprises and communities. Arvand was set up to provide microcredit to low-income individuals in urban areas. In addition to microcredit, MDO Arvand provides deposit and microleasing services. As of December 2012, MDO Arvand reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 25 million, a gross loan portfolio of USD 20.7 million, approximately 2,500 depositors with 19,400 active borrowers, return on assets (ROA) of 4.49 percent and return on equity (ROE) of 29.7 percent.

About Opportunity Bank Serbia

OBS is a deposit-taking microfinance institution that has been present in Serbia since 2002. It provides loans to small businesses, entrepreneurs, agricultural households and agricultural producers. OBS also offers loans, current accounts and savings accounts to private individuals. Opportunity Bank Serbia (OBS) is a member of “Opportunity International”, a network of banks and microfinance institutions (MFIs) that was founded in the US city of Chicago in 1971. As of December 2012, OBS reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 91 million, a gross loan portfolio of USD 64 million, approximately 9,300 depositors with 14,000 active borrowers, return on assets (ROA) of 0.46 percent and return on equity (ROE) of 2.56 percent.

Sources and Additional Resources

[1] The Smart Campaign: Four New Smart Certified Microfinance Institutions in Eastern Europe and Cenral Asia

[2] The Smart Campaign Website: The Client Protection Principles

MicroCapital, March 12, 2013, MasterCard Foundation Donates $4.3m to Smart Campaign for Microfinance Client Protection Effort

MicroCapital, January 31, 2013, Smart Campaign of Microfinance Institutions Regarding Client Protection

MicroCapital, February 24, 2012, Multilateral Investment Fund (MIF) to Support Smart Campaign to Improve Client Protection in Latin American, Caribbean Microfinance Institutions

MicroCapital Universe Profile: The Smart Campaign

MicroCapital Universe Profile: Bai Tushum Bank Closed Joint Stock Company

MicroCapital Universe Profile: Kompanion Financial Group Microfinance Closed Joint Stock Company

MicroCapital Universe Profile: Microcredit Deposit-Taking Organization (MDO) Arvand

MicroCapital Universe Profile: Opportunity Bank Serbia

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