Crisil removes 9 MFIs from negative rating watch list

NEW DELHI: Credit rating agency Crisil on Friday said it has removed nine microfinance institutions from its list of negative rating watch on the basis of the conclusion that the Andhra Pradesh ordinance might not impact their profitability.
Crisil said it has reaffirmed the existing ratings on nine MFIs, which operate primarily outside Andhra. “The outlook on their long-term ratings is stable,” Crisil said .
Crisil said it was unlikely that there would be any further deterioration in the operating and funding environment for these nine MFIs.Andhra Pradesh had in October last year enacted rules against coercive recovery practices by the micro finance companies, which offer loans to customers at a rate as high as 36%.
“MFIs outside Andhra have managed to endure the crisis by slowing down disbursements, conserving liquidity and maintaining healthy collections (of around 97 to 99%),” Crisil said, adding that it believes that these trends were sustainable.
These MFIs have been able to raise additional funding from banks and other sources. Crisil expects that the “funding for these MFIs will revive faster once the regulatory environment for the MFI sector becomes clearer.”