Other than pricing levels, there are the burning issues of inappropriate repossession and untrue information. The first refers to using undue or illegal pressure on clients to repay loans: physical abuse and raiding houses for example. The second applies to the so-called flat interest rate methodologies that give customers a highly skewed picture of the actual costs of loan provision.

Both practices are usually illegal and severely punishable in mature markets, yet each is on the rise and already quite common in emerging microfinance markets, facilitated by inadequate legal systems to enforce the honoring of contracts and financial illiteracy on the part of customers are both responsible. However, does either of these justify bad practices?

The proposed Alliance standard here is a simple one:

MFIs argue that they have a responsibility to their own bottom line and that it is up to regulatory authorities to decide what is and is not acceptable in their own countries. However, the Alliance encourages investors to check what policies their potential investee MFIs apply and refrain from placing investments with institutions where the standard is either unclear or has been violated.

Beyond the three issues of pricing, repossession and information there are probably a good many other issues on the formulation of standards that merit serious discussion and contemplation. But that is beyond our opening bid. We propose to start the discussion with the two standards introduced above and move from there, preferably to the point of outlining the basics of a preliminary Ethical Certification Package to be offered to the industry for its perusal and adaptation.