Microfinance Institution (MFIs) Rating

Microfinance institutions are organizations that provide loans to low-income clients, including micro-companies and the self-employed, who traditionally lack access to mainstream sources of finance from Banking Institutions. The risk assessment process for Microfinance Institutions comprises comprehensive analysis of the particular segment in which it operates, profile of the MFI, and its relative position in its respective segment. Analyzing the profile of the MFI includes comprehensive coverage of both quantitative and qualitative factors. In its assessment, PACRA’s quantitative analysis helps to reach an anchor rating. This rating can then be affected by qualitative factors – the modifiers. After standalone rating is finalized, the MFI’s rating is concluded while incorporating sponsor’s assessment of financial strength and expected / agreed level of support.

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