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A Pilot Project to Establish a Methodology and Criteria for Rating Microfinance Institutions
25 Sep 2009, Bala, A. & Garibian, S.
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Helping investors assess microfinance investment opportunities

This report presents findings from a pilot project that established a methodology and criteria for rating MFIs.

The study, undertaken by Standard & Poor's Ratings Services rated the institutional performance of 10 MFIs from Latin America, Eastern Europe and Asia. Using financial institutions rating criteria and methodology, the project analyzed MFIs based on System wide factors, corporate structure, financial risk profile and enterprise risk management.

MFI ratings ranged from a high of 'BB' to a low of 'CCC'. The study revealed that MFIs:

Have been grappling with funding issues, but are optimistic that liquidity constraints will ease up;
Want to obtain adequate, long-term funding, maintain strength of their asset quality and build more cost-effective organizations;
Must engage with government and regulatory bodies to prevent potential counterproductive regulatory requirements;
Expect to see a decrease in client repayments;
Identify inflation, contractions in their economies; unemployment and decreases in remittances as key factors affecting clients;
Are coping by drawing up more conservative growth plans, paying closer attention to origination practices, and increasing efficiencies through higher productivity.

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24 Feb 2010



Mir Hossain Chowdhury Grameen Trust Bangladesh

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Journal Volume/Pages:
26

Publisher(s):
Standard & Poor's