The Credit Rating and Information Services of India Ltd. (CRISIL), an Indian agency, recently announced its ‘BBB/stable’ rating for Equitas Micro Finance Private Ltd., an Indian microfinance institution. The rating was granted based on an assessment of Equitas’ capitalization, board of directors and management team, systems and performance compared to its business plan. Offsetting these strengths, however, is uncertainty of Equitas’ asset quality and its geographic concentration, which was determined not to ideally diversify the company’s risk. Additionally, Equitas is exposed to risks inherent in the microfinance industry, primarily the credit risk of its borrowers.
CRISIL states that Equitas’ rating could be improved to ‘Positive’ if the company can increase its competitive position without sacrificing the quality of its assets or its profitability, while a ‘Negative’ rating could result if loan delinquencies increase or if capital reserves deteriorate.
By Jennifer Shevock, Research Associate
About Credit Rating and Information Services of India Ltd. (CRISIL):
The Credit Rating and Information Services of India Ltd. (CRISIL) is a credit rating agency based in Bangalore, India, that operates internationally. It provides ratings for microfinance institutions (MFIs), including approximately 30 that report to the MIX Market, the microfinance information clearinghouse. Some of these MFIs include Bandhan, BASIX, Cashpor Microcredit, Equitas and Spandana. In October of 2009, CRISIL published a list entitled “Top 50 Microfinance Institutions in India.” Its offerings include credit ratings, research on India’s economy, industries and companies, investment research, fund services, risk management and infrastructure advisory services.
About Equitas Micro Finance Private Ltd.:
Equitas Micro Finance Private Ltd. is a microfinance institution 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 Indian underbanked population, as well as achieve sufficient returns on investment in order to attract capital. Total assets are INR 7 billion (USD 147 million) at March 31, 2010.
Sources and Additional Resources:
“CRISIL reaffirms ‘BBB/Stable’ ratings of Equitas Micro Finance” July 18, 2010.
http://www.microfinancefocus.com/news/2010/07/18/crisil-reaffirms-bbbstable-ratings-of-equitas-micro-finance/
“Top 50 MFI’s in India” http://www.crisil.com/credit-ratings-risk-assessment/CRISIL-ratings_india-top-50-mfis.pdf
MicroCapital Universe: Credit Rating and Information Services of India Ltd. (CRISIL): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CRISIL
MicroCapital Universe: Equitas Micro Finance Private Ltd.: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Equitas+Micro+Finance+India+Private+Limited
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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