The ratings of three microfinance institutions — Grameen Financial Services Pvt Ltd, Ujjivan Financial Services Pvt Ltd and Utkarsh Microfinance Private Ltd — have been upgraded by ICRA.

The ratings on the long-term bank loans (amounting to Rs 403.27 crore) and non-convertible debentures (amounting to Rs 178 crore) of Grameen Financial Services Pvt Ltd (GFSPL) have both been upgraded to ‘BBB’ (stable) from ‘BBB-’ (stable), the credit rating agency said in a statement.

The rating on NCD (Rs 25 crore) of Ujjivan has been upgraded to ‘BBB’ (stable) from ‘BBB-’ (stable).

The rating on Utkarsh’s long term loans (Rs 100 crore) has been upgraded to ‘BBB-’ (stable) from ‘BB+’ (stable).

ICRA said the upgrade for these NBFCs (focused on microfinance lending) reflects likely improvement in the resilience of their earnings, superior ability to scale up as well as strengthened capacity to control asset quality.

A combination of factors that have led to these improvements are: clarity and changes in the regulations, the internal changes at the individual microfinance institutions (MFIs); and ability of the MFIs to regain the confidence of equity investors as reflected in the equity infusions post the Andhra Pradesh crisis.

According to ICRA’s rating scale, instruments with ‘BBB’ rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

Instruments with ‘BB’ rating are considered to have moderate risk of default regarding timely servicing of financial obligations.

The modifiers ‘+’ and ‘-‘reflect the comparative standing within the rating category.

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