Interesting debate happening in the Genfininance website forum: why do many financial institutions in developing countries require the husband's signature when a woman asks for a loan? And what should the microfinance industry, active in empowering women through microfinance, do in this case?

Someone said that financial institutions may not be interested on who pays backs the loan, be the wife or the husband; their major and only concern is in fact risk reduction. Financial institutions then might be feeling more secure giving loans when there is backing of husband to his wife. There could be several reasons for this:
1) in many countries, especially in the Islamic area, women have weaker property rights;
2) the perceived weaknesses of the woman as a businessperson;
3) in case of disputes or beak up between wife and husband in most of developing countries the distribution of property and income is unequal and wife may become bankrupt;
4) in case of disputes between wife and husband the court decisions can take a long time,creating hurdles for banks to recover the loan amount till the decision comes in favor or against the women.

In this perspective, if these issues are taken into consideration efforts should be made to change the above discriminatory approaches of law, state and in society. If property and assets rights of women will be ensured with that of equal to man, banks may not ask for husbands signatures to grant loans to women.

MFIs should then advocate for equal rights of the financial system's clients and for government provision of financial literacy and consumer education: with evolving socio economic conditions, the law has to be evolved too, which happens generally when such an issue is advocated strongly and with a wider cause and influence. In the process of empowering women and trying to reach equality, men should not be excluded, on the contrary. The process should raise awareness in all stakeholders involved and make sustainable changes in the society. One example comes from Latin America, where some organizations ask for spouses to sign consent in the case of both women and men. That means women must be aware of their husbands' liabilities and this creates equality, although there is a need to be cautious, because this might also lead the woman to be liable if the husband then defaults on irresponsible lending. In a country where women have less property rights then men, this can lead to serious consequences.

Thus, there is a need for the microfinance (and possibly international development) industry to work on two levels here: advocacy, in order to make higher level changes in law and consequently in society and sage choices in the requirements asked from the clients, following a specific and binding code of conduct including policies related to how lending should be approached.