Microfinance Institutions Rating Methodology

The Pakistan Credit Rating Agency
Microfinance Institutions
Rating Criteria
Methodology
Table of Contents
Introduction.........................................................2
Profile ..................................................................3
Qualitative Factors ..............................................4
Business Risk ......................................................8
Financial Risk ....................................................15
Summary
PACRA’s methodology documents lay out the framework guiding its Credit Rating Process. This document provides an overview of PACRA’s approach to assigning Credit Ratings to Microfinance Banks (MFBs) & Non-Banking Microfinance Companies (NBMFCs). PACRA’s opinion is based on a mix of qualitative and quantitative assessment factors that include Profile, Ownership, Governance, Management, Business Risk & Financial Risk. While standalone credit quality is addressed by PACRA, it incorporates the relative position of a Microfinance Institution to arrive at the final Credit Rating. Analyst Contacts:
Nusrat Abeer Hyder nusrat.abeer@pacra.com
+92 42 3586 9504
The Pakistan Credit Rating Agency:
Head Office
FB 1 Awami Complex
Usman Block, New Garden Town
Lahore
Phone: +92 42 3586 9504
Karachi Office
169/1, Street No 21.
Khayaban-e-Qasim, DHA Phase 8
DHA, Karachi
Phone: +92 346 2578624
Disclaimer: PACRA has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy or completeness is not guaranteed. PACRA shall owe no liability whatsoever to any loss or damage caused by or resulting from any error in such information. Contents of PACRA documents may be used, with due care and in the right context, with credit to PACRA. Our reports and ratings constitute opinions, not recommendations to buy or to sell