Mumbai: Leading ratings agency Crisil today said it has upgraded the ratings of Equitas and Ujjivan micro-finance companies following positive developments in the crisis-affected sector where micro-lenders have of late been witnessing a jump in fund inflows.
It also revised its outlook on Janalakshmi Financial Services to positive.
"With increasing investor and lender confidence, we believe entities such as Equitas, Ujjivan, and Janalakshmi are well positioned to meet their revised business plans. Their combined assets under management are expected to nearly double from December 2011 levels to Rs 3,000 crore by March 2013," Crisil director Ramraj Pai said.
Their profitability will improve due to cost reduction initiatives, stronger systems and processes, and growth resumption, another director Nagarajan Narasimhan said.
Equitas Microfinance and its wholly-owned subsidiary Singhivi Investment and Finance was upgraded to BBB/stable from BBB-/positive, while Ujjivan Financial Services has been upgraded to BBB/stable from BBB-/stable.
The outlook on Janalakshmi Financial Services has been raised to being 'positive' while its rating has been kept unchanged.
It can be noted that two large MFIs-SKS and Bandhan have securitised their debt worth Rs 534 crore from an unnamed public sector lender, and Rs 500 crore from IDBI Bank, respectively late last week.
These three institutions have raised Rs 1,300 crore through diversified sources like banks, non-convertible debentures, and securitisation post the Andhra crisis in October 2010, it noted.
They also raised Rs 180 crore in equity capital in FY12 and are expected to raise over Rs 100 crore more in the medium term, it said.
Large MFIs having sizable operations outside Andhra are expected to go ahead with their growth plans, albeit at a slower pace, the agency said in a note.
Greater regulatory clarity and stable operating environment observed in the recent months has also helped the lenders, it said.
The MFI sector, once billed as the sunshine sector which will alleviate thousands of countrymen out of poverty, found itself in trouble after allegations of coercion by recovery agents in the biggest market of Andhra cropped up in the late 2010.
Andhra came up with a stringent law to regulate the sector, following a spate of suicides by harried borrowers, which was later followed by the Reserve Bank bringing clarity by saying it would regulate the sector itself and also softening the hard conditions stipulated in the AP law.