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Global Microfinance Ratings Comparability

Developing a common rating system for microfinance
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This publication discusses how the four leading specialized microfinance ratings agencies (SMRAs), namely, MicroRate, Micro-Credit Ratings International, Ltd. (M-CRIL), Planet Rating, and MicroFinanza Rating, collaborated with each other to develop a common financial rating product name and specialized microfinance ratings comparability table. Multilateral Investment Fund (MIF) initiated and funded the collaboration to address specialized microfinance rating industry needs.The SMRAs were founded between 1997 and 2000. Each of the four SMRAs historically used a different name for its respective signature financial performance rating product. The publication proposes a replacement of these four product names with a single standardized name: Microfinance Institutional Rating. Each of the four SMRAs has agreed to adopt Microfinance Institutional Rating as its primary rating product name, but will maintain the prior number of rating grades, lettering systems, and respective proprietary methodologies. Implications of the three words in the name are as follows:
  • ‘Microfinance’ indicates that the rating methodology is applicable to all institutions conducting microfinance and providing financial services for the poor;
  • ‘Institutional’ because it is based upon a comprehensive assessment of the institution;
  • ‘Rating’ because each client receives an overall rating grade.