PACRA Assigns Initial Entity Ratings to Kashf Foundation

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 sources of borrowings and has further plans to enmesh diversification therein. 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. Good management practices alongside proficient systems reflect the foundation's considerable experience in the rapidly growing microfinance sector. Asset quality persists to be sanguine on the backdrop of sound controls and recovery mechanism. A strategy is in place directed towards expanding the foundation's credit outreach to enhance its clientele as well as meet its disbursement targets. 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.

About the Entity
Kashf Foundation ("Kashf") was incorporated with the Securities and Exchange Commission of Pakistan (SECP) in 2007 as a Public Company Limited by Guarantee under Section 42 of the Companies Ordinance, 1984 (now Companies Act, 2017). It is also licensed by the SECP under Non-Banking Finance Companies Rules, 2003. Kashf operates at a national level with a network of 292 branches and is dedicated to serving the marginalized community, particularly women, to extend funds with an objective of promoting financial inclusion.

The overall control of the foundation vests in nine member Board of Directors. The board is chaired by Mr. Mueen Afzal, while Ms. Roshaneh Zafar is the founder and CEO of the foundation. She is assisted by a team of seasoned professionals. Most of them are long associated with the foundation.