Funding and growth prospects improve for non-Andhra MFIs

CRISIL Ratings has come out with its report on "funding and growth prospects improve for non-Andhra MFIs". The rating agency expects profitability of Equitas, Ujjivan, and Janalakshmi to improve due to their cost reduction initiatives, stronger systems and processes, and growth resumption.

CRISIL upgrades ratings of two large MFIs; revises outlook to Positive for one more

CRISIL observes that fund flows to the microfinance sector have improved in recent months because of greater regulatory clarity and stable operating environment. In particular, lenders have shown preference for large and well-managed microfinance institutions (MFIs) operating outside Andhra Pradesh (Andhra). These MFIs have raised reasonable equity capital over the past few months, thereby enhancing the confidence of lenders and stakeholders. Because of their adequate resource profile and capital position, CRISIL expects large MFIs based outside Andhra to resume their growth plans, albeit at a slower pace than before the Andhra crisis. CRISIL also expects the profitability of these MFIs to improve moderately, driven by resumption of growth, economies of scale, and healthy asset quality.

Taking note of these developments, CRISIL has upgraded its rating on Equitas Micro Finance India Pvt Ltd (Equitas) and its wholly owned subsidiary, Singhivi Investment & Finance Pvt Ltd, to

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