Workshop on Microfinance Institutions Rating – July
Banker’s Institute of Rural Development (BIRD), Lucknow and Microfinance Institutions Network (MFIN) jointly organized a workshop on "Microfinance Institutional Ratings" with support from NABARD on 29th July 2019 in Lucknow. MFIN made a presentation on “Performance benchmarks by institutional sizes & the need for reviewing rating framework”. The presentation highlighted the difference in performance among Small, Medium and Large MFIs in terms of outreach (growth), operational and cost efficiency and financial performance, which formed the basis for the two Panel discussions. The roundtable was attended by senior officials of NABARD and BIRD, Rating Agencies and 21 MFIN members including NBFC-MFI, Bank, SFB and Corporate BC. The roundtable concluded with the following suggestions:
- As the next step, it is important to obtain feedback from the banks (Public as well as Private sector banks) and other lenders on their acceptance of a combination of Rating and Grading for making lending decisions. BIRD and MFIN should jointly organize a similar roundtable with Banks to discuss this.
- At the same time, the MFIs also need to understand what are the minimum performance parameters which constitute a rating/grading to at least cross the entry barrier. The rating agencies may share a SOP of rating/grading process for the benefit of first timers and small MFIs. It will also be good if the rating/grading reports includes analysis of milestones on “Path to Profitability” for the smaller sized institutions for providing the investors an additional data point to support their investment decision.