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CRISIL’s ‘mfR3’ grading on Bharat Integrated Social Welfare Agency’s (BISWA’s) microfinance programme reflects the organisation’s improving capitalisation levels, and relatively better credit appraisal and monitoring mechanisms. BISWA’s good asset quality, diversified institutional funding profile, and improving operating expense ratio have resulted in its microfinance operations attaining sustainability during 2005-06 (refers to financial year, April 1 to March 31).However, these strengths are partially offset by the BISWA’s moderate governance practices, given the size and outreach of the microfinance operations, and deteriorating interest spreads, which could impact the profitability of the microfinance programme, going forward. CRISIL’s microfinance grading is a current opinion on a microfinance institution’s (MFI’s) ability to conduct its operations in a scalable and sustainable manner. The grading is assigned on an eight-point scale with ‘mfR1’ being the highest, and ‘mfR8’, the lowest. The grading is a measure of the overall performance of an MFI on a broad range of parameters under CRISIL’s MICROS© framework. It includes a traditional creditworthiness analysis using the CRAMEL approach, modified to be applicable to the microfinance sector. The acronym MICROS stands for Management, Institutional arrangement, Capital adequacy and asset quality, Resources and asset-liability management, Operational effectiveness, and Scalability and sustainability. |
