Grading of Micro Finance Institutions (MFI)

CARE Advisory Research and Training Limited (CART) propose to offer MFI Grading service to its clients. In the past this service was provided by parent company of CART (CARE Ratings Ltd.), this product has been transferred by CARE Ratings to CART in order to comply with regulatory guidelines.

Cart's Grading Framework/Methodology

CART’s MFI grading is a one-time assessment of a Micro Finance Institution’s (MFI) operational and financial capability to undertake and sustain the targeted level of operations. CART evaluates an MFI under a four point framework:

  • Governance
  • Accounting Policies
  • Internal Control
  • Transparency in the usage of grants and funds
  • Transparency in the lending process
  • Promoter/Management Assessment
  • Organisational Structure
  • Systems and Procedures
  • Quality of information System
  • Litigation
  • Risk Mitigating mechanisms
  • Geographical spread of operations and outreach
  • variety of loan products
  • Efforts to increase outreach and coverage

a. Financial Sustainability

  • Resource Profile
  • Cost Structure
  • Interest rate policies
  • Capital Adequacy
  • Asset Quality
  • Earnings
  • Liquidity and Asset Liability Management

b. Operational Sustainability

  • Succession planning
  • Competition
  • Resource arrangements
  • Vision

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