MICROCAPITAL BRIEF: Credit Rating Information Services of India Limited (CRISIL) Upgrades Rating of Evangelical Social Action Forum (ESAF) Microfinance

Credit Rating Information Services of India Limited (CRISIL), an Indian ratings, research, risk and policy advisory company, has elevated the rating of Evangelical Social Action Forum (ESAF) Microfinance, a microfinance institution (MFI) based in the Indian state of Kerala, to “mfr2.” [1][2] According to CRISIL’s rating system, the prefix “mfr” indicates the rating of microfinance institutions, and there are eight possible ratings ranging from mfr1, the highest rating, to mfr8, the lowest possible rating. According to a statement attributed to K. Paul Thomas, the chairman and managing director of ESAF Microfinance, the “rating reflects the current state of the company to conduct business in a scalable and sustainable manner” [1]. ESAF Microfinance received a rating of “mfr2” based on the company’s servicing capabilities, payment mechanisms and the security of the legal structure associated with transactions backed by ESAF Microfinance [3].

As of December 2013, ESAF reported total assets of USD 87.1 million, a gross loan portfolio of USD 58.7 million and approximately 451,000 borrowers. As of March 2012, ESAF reported return on assets of 1.95 percent and return on equity of 11.31 percent. ESAF does not accept deposits.

By Benjamin Krupp, Research Associate

About Credit Rating Information Services of India Limited (CRISIL)

Founded in 1987, CRISIL is an Indian ratings, research, risk and policy advisory company that is based in Bangalore, India. It provides ratings for microfinance institutions (MFIs), including approximately 30 that report to the Microfinance Information Exchange, the microfinance information clearinghouse. Its offerings also include research on India’s economy, investment research outsourcing, fund services, risk management and infrastructure advisory services. CRISIL’s majority shareholder is Standard & Poor’s, the US-based credit rating agency.

About ESAF Microfinance and Investment Private Limited (EMIFL)

Established in 1992 and based in the Indian state of Kerala, ESAF Microfinance and Investment Private Limited (EMIFL) is a microfinance institution (MFI) that is promoted by the ESAF (Evangelical Social Action Forum), an NGO engaged in self help group (SHG) promotion, microfinance and other community development initiatives. It operates in the states of Kerala, Tamil Nadu, Maharashtra, Chhattisgarh, Madhya Pradesh and Delhi. As of December 2013, ESAF reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 87.1 million, a gross loan portfolio of USD 58.7 million and 451,000 borrowers. As of March 2012, ESAF reported a return on assets (ROA) of 1.95 percent and return on equity of 11.31 percent. ESAF does not accept deposits.

Sources and Additional Resources

[1] The Hindu Business Line: Crisil Upgrade ESAF Microfinance

[2] ESAF Microfinance and Investments: ESAF Microfinance Home

[3] CRISIL Ratings: Rating Rationale

MicroCapital, March 1, 2012: Rating Agency CRISIL Upgrades Indian Microfinance Institutions Ujjivan, Equitas, Janalakshmi

MicroCapital, May 18, 2011: Credit Rating and Information Service of India Limited (CRISIL) Predicts Reserve Bank of India Guidelines Will Spur Bank Lending to Microfinance Institutions (MFIs), Trigger Consolidation

MicroCapital, April 13, 2010: Dutch Investor in Microfinance Institutions (MFIs) Oikocredit Pays USD 675,000 for 10-Percent Stake in India-based ESAF Microfinance and Investment

MicroCapital Universe Profile: Credit Rating Information Services of India Limited (CRISIL)

MicroCapital Universe Profile: ESAF Microfinance and Investment Private Limited (EMIFL)

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