CRISIL has assigned its ‘CRISIL BB/Stable’ rating to the bank facilities of IDF Financial Services Pvt Ltd (IDF FSPL). The rating reflects IDF FSPL’s comfortable capital levels, extensive experience of its promoters and senior management in the rural development and financial services industry, and adequate systems, processes, and loan monitoring mechanisms.
These rating strengths are partially offset by IDF FSPL’s small scale of operations, regional concentration in its revenue profile, modest asset quality and earnings profile, and constrained funding environment for microfinance institutions in India.
CRISIL believes that IDF FSPL will continue to benefit from the extensive experience of its promoters and senior management in the field of rural development and financial services. The company’s scale of operations and asset quality are expected to remain modest over the medium term. The outlook may be revised to ‘Positive’ if IDF FSPL significantly increases the scale of its operations and improves its asset quality and earnings profile. Conversely, the outlook may be revised to ‘Negative’ if the company is unable to raise adequate funds to increase its scale of operations, or if its asset quality deteriorates substantially, adversely impacting its capitalisation.
About Initiatives For Development Foundation
IDF FSPL, based in Bengaluru, commenced microfinance operations in April 2009 by taking over the portfolio of Initiatives for Development Foundation, a non-profit organization promoted by professionals with background in banking and entrepreneurship training. IDF FSPL lends to self-help groups (SHGs), mainly comprising women; these groups are promoted by IDF FSPL.
As on August 31, 2011, IDF FSPL had presence in 12 districts in Karnataka with a loan portfolio outstanding of Rs.674.3 million. IDF FSPL lends to SHGs for duration of 12 months to 36 months with monthly repayment. As on September 30, 2011, IDF FSPL had a network of six area offices with reported loan disbursement of Rs.842.6 million in 2010-11.
During 2010-11 (refers to financial year April 1 to March 31), IDF FSPL reported a net profit of Rs.3.3 million on a total income of Rs.121.44 million as compared to a net profit of Rs.3.1 million on a total income of Rs.85.31million during 2009-10.