SME Rating Agency of India Limited (SMERA), a joint initiative of Small Industries Development Bank of India, Dun & Bradstreet and leading public and private sector banks, which is presently offering enterprise ratings to Micro, Small & Medium Enterprises has now launched rating services for Microfinance Institutions – (MFI).
Microfinance sector in India has been exhibiting healthy growth over past few years and according to rough estimates, there are over 1000 MFI’s currently operating in India. In the financial year 2007-08, Microfinance in India, through its two major channels i.e. Self Help Groups & Bank Linkage Program (SBLP), and Microfinance Institutions have served over 54.87 million Indians effectively. MFI’s have the potential to bring about inclusive growth by accessing and disbursing loans to the poor, thereby reducing their dependence on informal credit sector. Besides, MFI’s have enhanced awareness of relevant local issues, encouraged local economic activities, generated employment & played a pivotal role in community development activities, social empowerment etc.
Considering the relevance of MFIs to the local economy and heightened interest of international funds in this sector, MFI Ratings have become an integral part of MFI assessment process in confidence building exercise within the investors’ community, locally and overseas. Keeping in view the potential of MFIs to bring about inclusive growth in the country, SMERA, by virtue of its experience to assess Micro, Small and Medium enterprises has decided to launch MFI Rating services from this year.
SMERA-MFI Rating is an independent, third party comprehensive assessment of various risks involved in financial as well as social performance of a MFI. The rating process would include submission of data by the applicant followed by the site visit and interaction with management. The final rating assessment is undertaken by a committee and on finalization the rating is disseminated to the referrer.
SMERA Rated MFIs would be allotted a D&B D-U-N-S Number and will also be featured on Dun & Bradstreet’s Global Database. Such profiling of SMERA’s MFI Ratings is expected to enhance credibility of MFI within the banking sector, social investing and other similar institutions not only in the domestic market, but also internationally. Shri. R. M. Malla, Chairman SMERA, has expressed that SMERA’s banking linkages (11 promoter banks & 26 MOU banks) will prove beneficial to MFI’s rated by SMERA and better rated MFI’s could benefit by way of access to bank finance on better terms.