'Self regulation for a sustainable future'

CHENNAI: A network of NGOs has decided to take the first step towards self regulation by adopting a set of guidelines on financing, administration and ethics to be followed in running an NGO.

The guidelines, proposed at a conference of NGO leaders, aim to attain sustainability through self regulation and also expected to build confidence of the NGOs with banks, thereby boosting the microfinance sector.

"Along with the growth and spread of microfinance organisations come concerns over quality and sustainability of the various NGOs and SHGs in question. That's why we have come together to develop a self regulation framework," said M Kalyanasundaram, Chief Executive of the International Network of Alternative Financial Institutions (INAFI), that organised the conference on Friday.

Among the guidelines adopted were maintaining transparency in book keeping, promotion of financial literacy among microfinance clientele and the facilitation of inclusive financial growth.

The guidelines also insist SHGs and NGOs to campaign against usurious lending practices in the microfinance sector.

Banking officials welcome the self regulating initiative with enthusiasm. "SHGs need to keep in mind that banks and other institutional lenders are worried over the repayment of loans. In the absence of regulations, banks can only do so much," said N S Mishra, GM of Indian Overseas Bank.

He suggested that collectives, like INAFI, that bring SHGs and NGOs under a single banner could help enforce self regulation.