Microfinance Institutional Rating

Microfinance Institutional Rating Grade Scale

The Microfinance Institutional Rating (MIR) provides an opinion on the long-term institutional sustainability and creditworthiness of a microfinance institution (MFI) through a comprehensive assessment of risks and performance. MIRs can be conducted alone or combined with a Social Rating and/or SMART Campaign Client Protection Certifcation. MIRs are appropriate for both regulated and unregulated institutions.

View a sample MIR

The MicroRate analytical team undertakes a robust analysis of the MFI’s context, risk factors, performance, effectiveness, and long-term sustainability. The final report evaluates the MFI’s management of risk, its performance relative to industry benchmarks, and its responsible practices in the following five areas:

  • Microfinance Environment
  • Governance & Management
  • Organization & Operations
  • Portfolio Credit Risk
  • Financial Profile

Read more about the MIR methodology in the Rating Guide

In order to accurately capture this information, MicroRate starts with a pre-visit desk analysis of data and information collected from the client, followed by a thorough on-site evaluation of the institution by two analysts. The analytical team interviews all levels of management and personnel and visits several of the MFI’s branches. While on-site, the analyst team also collects any additional information needed and reviews client files and reports from the MFI’s information system. The on-site evaluation is followed by an analysis of all the data collected which is then consolidated into a final report. Prior to publication, the MFI is provided with a draft version of the report to review in order to ensure that there are no factual errors or misinterpretations. While the review of the draft does not influence MicroRate’s overall opinion, it provides the MFI with the opportunity to verify the data collected.
The final rating grade is a result of careful analysis and discussion by MicroRate’s International Rating Committee. The International Rating Committee is composed of senior management and seasoned analysts from MicroRate’s different field offices to ensure consistent, robust analysis. MicroRate does not apply a rigid rating formula as the impact of each risk on overall performance will vary between institutions. The final grade reflects the degree of an MFI’s efficiency and effectiveness, investment risk, vulnerability to external shock and future outlook. The grade remains valid for up to one year after the rating committee.

Benefits of the Microfinance Institutional Rating

MicroRate’s experience and knowledge of industry best practices enable MFIs to use our rating reports as a tool to improve performance. MicroRate’s reputation and international credibility allows MFI clients to attract international and local investors. MicroRate’s microfinance institutional ratings:

  • Strengthen internal management and operations
  • Enable comparison with similar MFIs through benchmarking
  • Professionalize and improve an MFI’s image
  • Attract funding

Rating Process

MicroRate’s performance rating includes a pre-visit desk analysis, on-site evaluation, and final report. The entire process from the pre-visit desk analysis to final report delivery is about 6-8 weeks.

Get a MicroRate Rating

To request a free quote for a MicroRate rating, contact us at info@microrate.com.

Microfinance Institutional Rating Grade Scale

View a sample MIR

Escala de Notas de la Calificación Institucional en Microfinanzas

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