| Grading >>MFI Grading |
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| CAREs' Grading Framework: |
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CARE's MFI grading is a one-time assessment of a Micro Finance Institution's (MFI) operational and financial capability to
undertake and sustain the trageted level of operations. CARE evaluates as MFI under a four point framework:
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- Transparency
- Operational setup
- Scale of operations
- Sustainability
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The various aspects covered under each parameter are given below:
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| Transparency |
Operational Setup |
- Governance
- Accounting Policies
- Internal Control
- Transparency in the usage of grants and funds
- Transparency in the lending process
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- Promoter/Management Assessment
- Organisational Structure
- Systems and Procedures
- Quality of information System
- Litigation
- Rish Mitigating mechanisms
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| Scale of Operations |
Sustainability |
- Geographical spread of operations and outreach
- variety of loan products
- Efforts to increase outreach and coverage
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a) Financial Sustainability
- Resourse 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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| CARE's Grading Scale/Symbols |
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| MFIs operational and financial capability to undertake and sustain the targeted level of operation is graded
on an eight point scale as below:
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| Grading Symbol* |
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| MFI 1 |
Highest |
| MFI 2+ |
↓
↓
↓
↓
↓
↓ |
| MFI 2 |
| MFI 3+ |
| MFI 3 |
| MFI 4+ |
| MFI 4 |
| MFI 5 |
Lowest |
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| *There is no individual defination for each grading |