ICRA, an Indian investment information and credit rating agency, has conditionally raised the rating of a pool of pass through certificates (PTCs) for loans provided by Arohan Financial Services Private Limited, an India-based microfinance institution. The upgrade from A2(SO), which indicates a low credit risk, brings the rating to A1(SO), which is reserved for instruments with the lowest credit risk. “SO,” which stands for standard obligation, indicates that the rating is specified to the rated issue, its terms and its structure [2].
The increase in the rating is a reflection of the good performance thus far of the PTCs, as no delinquencies have been reported. The PTCs are the result of a securitization transaction backed by receivables of unsecured group microloans, each of which has a maximum value of INR 17,500 (USD 354) and a maximum repayment period of 15 months [1]. The initial amount of the loan was INR 71.8 million (USD 1.4 million), and the outstanding amount as of December 2011 is INR 17.4 million (USD 357,619).
The US-based Microfinance Information Exchange (MIX) reports that in 2010 Arohan had total assets of USD 23.4 million and a gross loan portfolio of USD 20.2 million outstanding to approximately 214,000 borrowers.
About Arohan Financial Services Private Limited
Arohan is a microfinance institution (MFI) based in Kolkata, India. Founded in 2006, it offers loans and life insurance primarily in urban areas of eastern India. In 2010, Arohan reported total assets of USD 23.4 million and a gross loan portfolio of USD 20.2 million reaching 214,059 borrowers in India. It also reported return on assets of 0.32 percent and return on equity of 1.63 percent.
About ICRA
Formerly known as the Investment and Credit Rating Agency of India Limited, ICRA Limited was established in 1991 as a public limited company. Its shares are listed on the Bombay Stock Exchange and the National Stock Exchange of India. Moody’s Investors Service of the US is the largest shareholder in ICRA .
By Charlotte Newman, Research Associate
Sources and Additional Resources:
[1] ICRA Report: “Arohan Financial Services Private Limited (Arohan),” http://www.icra.in/Files/Reports/Rationale/Arohan%20Financial%20Services%20Priv-r-11012012.pdf
[2] ICRA: “ICRA’s Ratings Scale and Definitions,” http://icra.in/Files/Content/RatingsScale.pdf
MicroCapital story, September 27, 2011, “MICROCAPITAL BRIEF: Indian Rating Agency ICRA Assigns “A2(SO)” Rating to $1.45m in Pass Through Certificates from Microfinance Institution Arohan,” https://www.microcapital.org/microcapital-brief-indian-rating-agency-icra-assigns-%E2%80%9Ca2so%E2%80%9D-rating-to-1-45m-in-pass-through-certificates-from-microfinance-institution-arohan/
MicroCapital Universe Profile: Arohan
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Arohan
MicroCapital Universe Profile: ICRA
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ICRA
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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