The Indian rating agency Credit Rating and Information Services of India Limited (CRISIL) has upgraded the ratings of Indian microfinance institutions (MFIs) Equitas Micro Finance India Private Limited and Ujjivan Financial Services from BBB- to BBB, a level that indicates a moderate level of safety [1] [2]. CRISIL also revised the outlook of Indian MFI Janalakshmi Financial Services (JFS) to positive. The MFIs reportedly have been able to raise aggregate funds of INR 1,300 crore (USD 266 million) since October 2010 “due to greater regulatory clarity and stable operating environment” [3]. The MFIs are forecast to raise INR 100 crore (USD 20.5 million) over the medium term. Their combined assets are expected to double by March 2013 and profitability “is expected to improve moderately.”
As of 2010, Equitas reports to the Microfinance Information Exchange (MIX) assets of USD 216 million, a gross loan portfolio of USD 179 million, 889,000 active borrowers, return on assets (ROA) of 4.5 percent and return on equity (ROE) of 12.38 percent. As of 2011, Ujjivan reported to MIX total assets of USD 129 million, a gross loan portfolio of USD 121 million, return on assets (ROA) of -1.86 percent and 744,000 active borrowers. As of 2011, JFS reported to MIX total assets of USD 43.7 million, a gross loan portfolio of USD 40.8 million, 193,000 active borrowers, return on assets (ROA) of -1.38 percent and return on equity (ROE) of -4.83 percent.
By Brendan Millan, Research Associate
About Credit Rating and 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 financial institutions, including approximately 30 MFIs that report to the US-based, nonprofit Microfinance Information Exchange (MIX) as of May 2011. Its offerings also include research on India’s economy, investment research outsourcing, fund services, risk management and infrastructure advisory services. CRISIL is majority-held by Standard & Poor’s, a US-based credit rating agency.
About Equitas Micro Finance India Private Limited: Equitas is a microfinance institution (MFI) that was created in December 2007 and is located in Chennai, India. The company provides microcredit to low-income households in India. The objective of the company is to make credit available at a reasonable cost and in a transparent manner to the underbanked population of India, as well as achieve sufficient returns on investment in order to attract additional capital. As of 2010, Equitas reports to the Microfinance Information Exchange (MIX) assets of USD 216 million, a gross loan portfolio of USD 179 million, 889,000 active borrowers, return on assets (ROA) of 4.5 percent and return on equity (ROE) of 12.38 percent.
About Ujjivan Financial Services: Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that was founded in 2004 and focuses on serving low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of September 30, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 129 million, a gross loan portfolio of USD 121 million, return on assets (ROA) of -1.86 percent and 744,000 active borrowers.
About Janalakshmi Financial Services (JFS): Janalakshmi Financial Services (JFS) is a microfinance institution (MFI) located in India. It is focused primarily on offering loans, savings and microinsurance in urban areas. As of March 31, 2011, JFS reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 43.7 million, a gross loan portfolio of USD 40.8 million, 193,000 active borrowers, return on assets (ROA) of -1.38 percent and return on equity (ROE) of -4.83 percent.
Sources and Resources:
[1] CRISIL: “Funding and Growth Prospects for non-Andhra MFIs.”, http://www.crisil.com/Ratings/Brochureware/News/CRISIL-Ratings_mfi_280212.pdf
[2] Business Standard: “Crisil upgrades Equitas and Ujjivan.”, http://www.business-standard.com/india/news/crisil-upgrades-equitasujjivan/466224/
[3] CRISIL: “Credit Ratings- Scales.”, http://www.crisil.com/ratings/credit-rating-scale.html
MicroCapital.org Article, January 27, 2011, “Indian Rating Agencies, ICRA and Credit Rating and Information Services of India Limited (CRISIL), Predict Microfinance Institution (MFI) Consolidation Would Result From Reserve Bank of India (RBI) Proposals”, https://www.microcapital.org/microcapital-brief-indian-rating-agencies-icra-and-credit-rating-and-information-services-of-india-limited-crisil-predict-microfinance-institution-mfi-consolidation-would-result-from-reserve-ba/
MicroCapital.org Article, “Indian Rating Agencies, ICRA and Credit Rating and Information Services of India Limited (CRISIL) Predicts Reserve Bank of India Guidelines Will Spur Bank Lending to Microfinance Institutions (MFIs), Trigger Consolidation”, https://www.microcapital.org/microcapital-brief-credit-rating-and-information-services-of-india-limited-crisil-predicts-reserve-bank-of-india-guidelines-will-spur-bank-lending-to-microfinance-institutions-mfis-trigger-conso/
MicroCapital.org Article, January 4, 2011, “Rating Agency CRISIL downgrades Five Indian Microfinance Institutions (MFIs)”, https://www.microcapital.org/microcapital-brief-rating-agency-crisil-downgrades-five-indian-microfinance-institutions-mfis/
MicroCapital Universe Profile: Credit Rating and Information Services of India Limited (CRISIL), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Credit+Rating+and+Information+Services+of+India+Ltd.+%28CRISIL
MicroCapital Universe Profile: Equitas Microfinance, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equ
MicroCapital Universe Profile: Ujjivan Financial Services, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujjivan%20Financial%20Services
MicroCapital Universe Profile: Janalakshmi Financial Services (JFS), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Jan…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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