The Hindu Business Line : Ratings for MFIs, now

THE National Bank for Agriculture and Rural Development (Nabard) and rating agency Crisil have tied up to launch a grading scheme for microfinance institutions (MFIs)

Called Nabard-Crisil MFI Grading Scheme, it is an initiative to encourage banks to enhance credit delivery to the poor, said a press release from Crisil. The grading rates the ability of MFIs to scale up and sustain operations on an eight-point scale, the release said.

The release quoted Mr Krishnan Sitaraman, Head, Financial Ratings, Crisil, as saying, "Barring a few, most MFIs are unable to get credit from the banking sector. Thus, the quantum of credit flow to MFIs is currently not significant."

As part of the scheme, Nabard will reimburse the banks the grading fees paid to Crisil. The scheme will initially be operational for a year. It will support the grading of those MFIs that have an outstanding loan of between Rs 50 lakh and Rs 5 crore.

Most MFIs in India are either partly regulated or not at all. Hence, a customised independent assessment of their scalability and sustainability will immensely benefit banks that want to partner with them.

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