New rating agency for Indian microfinance institutions launched

MF Focus, July 13, 2009: SME Rating Agency of India Limited (SMERA), a joint initiative of Small Industries Development Bank of India (SIDBI), Dun & Bradstreet and leading public and private sector banks, has launched rating services for Microfinance Institutions (MFIs), said a statement by the company.
SMERA, which is presently offering enterprise ratings to Micro, Small & Medium Enterprises, has decided to launch MFI Rating services from this year. SMERA-MFI Rating will be an independent, third party comprehensive assessment of various risks involved in financial as well as social performance of an MFI.
The rating process would include submission of data by the applicant followed by the site visit and evaluation. 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.
R. M. Malla, chairman of SMERA, has expressed that SMERA’s banking linkages with 11 promoter banks and 26 MOU banks will prove beneficial to MFIs rated by SMERA and better rated MFIs could benefit by way of access to bank finance on better terms.
Considering the growing relevance of MFIs and incresing flow 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.
Microfinance sector in India, growing steadily over past few years, has about 1,000 MFIs. In the financial year 2007-08, microfinance in India, largely represented by Self Help Groups & Bank Linkage Program (SBLP), and Microfinance Institutions, has served over 54.87 million Indians, the company said in a statement.

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