About

Microfinance Institution (MFI) Grading is an ordinal measure of the scalability, sustainability and reliability of the MFI’s internal processes, controls and governance structure.It does not comment on the debt repayment capacity and is not a credit rating.

India Ratings expects that the entity requesting a grading should have two years of operating track record. Grading is a point-in-time assessment undertaken at the request of the entity;therefore, there would be no follow-up coverage of the entity after the grading is assigned.

Grading Scale

Grading Definition (Sustainability, reliability and scalability)
IND MFI 1Highest
IND MFI 2
Higher
IND MFI 3
High
IND MFI 4
Above Average
IND MFI 5
Average
IND MFI 6
Below Average
IND MFI 7
Low
IND MFI 8
Lowest


The grading of sustainability, reliability and scalability involves a robust evaluation of over 250 data points that we seek from the entity being graded. These are grouped under the following broad parameters:

  • Governance Practices (including audit)
  • Compliance
  • Operational Setup of the entity
  • Scale of Operations
  • Financial Sustainability
  • HR practices, impact on borrowers

 Grading Process