From its origins decades ago in the nonprofit development sector, the modern microfinance industry is increasingly part of mainstream financial systems, run on commercial principles and demonstrating that providing financial services to low-income clients can be a sustainable, even profitable, business. MICRA Philippines Rating & Appraisals practice group works to deliver microfinance providers the tools they need both to demonstrate their financial position to external parties and for internal use to understand and strengthen business operations.
Ratings provide expert, independent evaluation and verification of institutional performance using the PRIME (Promotion of Ratings and Investments in Microfinance) Rating Tool. PRIME was developed by MICRA, its parent company Mercy Corps, and the International Finance Corporation (IFC), the private investment arm of the World Bank, to improve microfinance performance and transparency and thus promote investment. PRIME is based on national and international standards for banking and microfinance and is applicable for microfinance providers at all stages of development, from start-up to maturity.
MICRA Philippines Ratings & Appraisals unit’s main services include:
- Full Ratings. Used primarily for investment decisions, ratings fully analyze all financial and operational aspects of an institution based on comprehensive review of all relevant documents and on a 3- to 6-day field visit. Rated institutions ultimately receive a letter grade ranging from AA to D.
- Appraisal. Covers most of the same aspects as a full rating, but does not assign a letter grade. Primary use is internally, as a management tool.
- One-Day Assessments. Preliminary findings from a one-day field visit, used to determine whether a full rating should be conducted.
- Desk Review. For quick snapshot between ratings, desk reviews involve no field work and may also serve as initial screening prior to a one-day assessment.
Additional service:
- MABS Institutional Appraisal. In addition to the core services above, MICRA Philippines, an accredited MABS service provider, also offers shorter, specialized institutional and needs assessment reports designed exclusively for rural banks interested in participating in USAID’s MABS program. This MICRA specialty service briefs the rural bank on topics in microfinance and evaluates the bank through a “MABS lens.” The resulting report thus focuses on organizational capabilities, with more limited financial evaluation.
