IFC promotes Responsible Finance globally and HDFC received the FT/IFC Certification of Sustainable Finance as a promoter of Responsible Finance for 2011, 2012 and 2013. The implementation of a Social Performance Strategy and a successful Outreach Program saw financial inclusion being offered to under-served communities in far-flung islands.
'Voices from the field' featured a presentation of HDFC PLC of Maldives’ business case for responsible finance based on the experience of being the first to complete IFC’s Performance-Based Grant Initiative in 2011. HDFC addressed the 3 core questions: Do responsible finance practices within financial institutions help develop more consumer-centric products tailored for the underserved? What is the business proposition for clients across the financial sector and how can the proposition be further strengthened? Can there be a balance across financial and social returns? The session was moderated by Gilles Jacques Galludec, Head of the Micro and Retail Cluster at IFC. Read more..
Going Beyond Responsible Finance
As a benefit accruing from the IFC’s Performance Based Grant Initiative, which gave HDFC PLC of Maldives a social performance strategy as its ‘Purpose’, a fourth P was added to the organization’s triple bottom line of Planet, People and Profit. Therefore, since privatization in 2008, HDFC has a Quadruple Bottom Line for sustainable development that goes beyond responsible finance to offer an economic gain through a housing loan or an Islamic Financial solution that would accommodate development of a property to provide both housing, along with an enterprise solution to either rent or operate as own business premises to generate extra income for the family. Since HDFC’s mission is to offer financial and social strength to the people of Maldives, HDFC’s sustainable development is based on the four pillars of responsibility that fulfil its Quadruple Bottom Line to meet expectations of all its stakeholders.
With more than 2.7 billion people and over 400 million businesses still lacking basic financial services in much of the developing world, IFC remains a crucial player in increasing access to financial services through a range of products such as credit,savings, insurance, housing, and innovative retail payment systems. The financial sector, including microfinance, has seen enormous growth recently, but intense competition has provoked over-indebtedness and coercive credit collections in countries such as India and Bosnia. The ongoing financial crisis in Europe has underscored the importance of accountability and transparency for a more stable and resilient financial services sector. Responsible finance has since emerged as a tenet to help re-focus the industry on the needs of customers and provide more appropriate financial services.
Annual Forum Promotes Responsible Finance
IFC was the host of the Responsible Finance Forum (RFF) III on April 23, an event that convened over 150 participants from the financial sector, bilateral and multilateral donors and the broader international community. The Forum highlighted the need for helping strengthen responsible finance initiatives beyond microfinance – extending it into commercial banking, housing, insurance, mobile banking, and credit reporting institutions. In this regard, IFC will play a key role in embedding responsible finance principles into the “DNA” of financial institutions.
IFC has helped shape global thinking towards responsible finance since 2010, when the first annual Responsible Finance Forum was held by German Federal Ministry of Economic Cooperation and Development (BMZ) and CGAP. The Forum since has become an annual gathering and a global community of practice for sharing knowledge, building consensus and developing best practices.
RFF III was coordinated with BMZ, CGAP, Netherlands Ministry of Foreign Affairs and Principles for Responsible Investment and for the first time brought together leaders from the G20 Global Partnership for Financial Inclusion, World Bank Group, IMF and prominent private sector representatives to share experiences in putting responsible finance into action. The Forum also featured the SMART Campaign's Client Protection Principles and an update on the Principles for Investors in Inclusive Finance (PIIF) launched at RFF II.
Building on the achievements in the past where the Principles for Investors in Inclusive Finance (PIIF) were launched, Responsible Finance Forum highlights global progress and deepen the business case for implementing responsible finance.
The annual conference is designed to:
- Focus on actions to implement responsible finance practices exploring self -regulatory standards for client protection and financial education
- Hear voices from financial institutions and partners in the field, including practical challenges and solutions in implementing responsible finance principles emerging globally
- Create a roadmap for collective and institutional action in the financial sector, including the role of the international community through a Community of Practice in Responsible Finance to shape the agenda and within the broader G20 agenda.