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Luxembourg Microfinance and Development Fund

PRI reporting framework 2020

You are in Direct - Inclusive Finance » PIIF Principle 5: Transparency

PIIF Principle 5: Transparency

IFD 25. How mission and investment objectives are communicated to stakeholders (Private)


IFD 26. Investors and/or the public provided with information aligned with industry standards

Possible action:

Fully disclose policies, criteria and related conditions of products and services to investees and other relevant stakeholders.

26.1. Other than the PRI/PIIF, indicate if you provide your investors and/or the public with information aligned with industry standards.

26.2. Do you provide information aligned with:

          SPI4
        

26.3. Additional information. [Optional]

We regularly participate in industry surveys, such as the GIIN, to increase transparency across the industry


IFD 27. Transparency of pricing, terms and conditions among investees

Possible action:

Ensure that investees adequately disclose the pricing, terms and conditions of financial products and services offered, and that the pricing, terms and conditions are understood by clients.

27.1. Indicate if you encourage the retail institutions in which you invest to ensure that the following are transparent and fully explained to their clients (i.e. those seeking financial services from them) in a form they can understand.

Pricing

27.2. Indicate how you ensure this for pricing and provide examples.

Understanding products and how they are offered to ultimate clients is essential part of the due diligence process. This includes but it is not limited to clients visits or pricing anaylsis breakdown. This is systematically reviewed by analysts and is presented to the Investment Committee in their dossiers. Where provided, the Client Protection ALINUS is also reviewed, which has a particular component on responsible pricing.

During production of our social performance report this year, we have aggregated data on average interest rates charged by MFIs and then see how this translates into costs. When this exercise was previously performed, MFIs were making an average of -0.5% loss, now they are making an average of a 1% profit. This very modest level of profitability helps to provide reassurance in that appropriate pricing is used,.

Other terms and conditions

27.3. Indicate how you ensure this for other terms/conditions and provide examples.

Understanding products and how they are offered to ultimate clients is essential part of the due diligence process. Analysts will enquire about this in their DD missions and also try to gauge clients understanding on these matters. They systematically spend time visiting clients and ask about their knowledge of products. They also shadow loan officers at work. This is presented to the Investment Committee. The results of this are also captured in the ALINUS.

27.4. Additional information. [Optional]


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