PACRA Maintains Entity Ratings of Kashf Foundation
Lahore, June 19, 2019: Kashf Foundation is a renowned Microfinance Institution; it has been in operations since 1996. MFIs are governed by SECP regulations mainly NBFC (Establishment and Regulations) Rules, 2003, Non-Banking Finance Companies and Notified Entities Regulations 2008 and others. The key element is that MFIs are not permitted to mobilize deposits. While this provides funding constraints, it also delimits the boundaries of risk. Kashf Foundation is a not-for-profit organization. Hence, the source of funding comprises a) internal generation of profits, b) loans and c) grants.
Profitability of the foundation is sanguine and hence integral generation of capital is occurring at a very good rate. Second major source of funding is borrowings. The foundation has diversified its borrowing to both local and foreign institutions and is additionally issuing a (PPTFC) of PKR 2bln with a green shoe option of PKR 1bln to fuel growth. Governance structure takes strength from the body of members and board of directors, who, in their own right, are reputable individuals. The induction process reflects alignment of the incumbent members to the institution itself, a self-propelling drive to contribute. The quality of board discussions is an evidence to this assertion.
Design of the not-for profit MFI itself is the right recipe for longevity. There are examples in the world around, providing assurance. The ratings incorporate strong business profile of the foundation demonstrated by continued enhancement in business volumes. The foundation has been closely focusing on technological developments to uphold the growth with an integrated systems. Overall financial risk profile displays comfortable outlook.
The ratings are dependent on the foundation’s aptness to sustain positive asset health indicators amidst growth in business volumes. Meanwhile, sustenance of improved margins are imperative. The ratings would also monitor the impact of technological advancement on the operational and risk efficacy of the foundation.
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