RBI Fair Practices Code
What are the Client Protection Principles?
The Client Protection Principles describe the minimum protection microfinance clients should expect from providers.
These Principles are distilled from the path-breaking work of providers, international networks, and national
microfinance associations to develop pro-consumer codes of conduct and practices. While the Principles are universal,
meaningful and effective implementation will require careful attention to the diversity within the provider community
and conditions in different markets and country contexts. Over the past several years, consensus has emerged that
providers of financial services to low-income clients should adhere to the following six core principles:
• Avoidance of Over-Indebtedness. Providers will take reasonable steps to ensure that credit will be extended
only if borrowers have demonstrated an adequate ability to repay and loans will not put borrowers at significant
risk of over-indebtedness. Similarly, providers will take adequate care that noncredit, financial products (such
as insurance) extended to low-income clients are appropriate.
• Transparent Pricing. The pricing, terms, and conditions of financial products (including interest charges,
insurance premiums, all fees, etc.) will be transparent and will be adequately disclosed in a form understandable
• Appropriate Collections Practices. Debt collection practices of providers will not be abusive or coercive.
• Ethical Staff Behavior. Staff of financial service providers will comply with high ethical standardsin their
interaction with microfinance clients and such providers will ensure that adequate safeguards are in place to
detect and correct corruption or mistreatment of clients.
• Mechanisms for Redress of Grievances. Providers will have in place timely and responsive mechanisms for
complaints and problem resolution for their clients.
• Privacy of Client Data. The privacy of individual client data will be respected, and such data cannot be used for
other purposes without the express permission of the client (while recognizing that providers of financial
services can play an important role in helping clients achieve the benefits of establishing credit histories).