PACRA Maintains Entity Ratings of Pakistan Microfinance Investment Company Limited

The ratings of Pakistan Microfinance Investment Company Limited (PMIC) reflect its strong equity base, well-conceived business plan and a strong ownership structure. Pakistan Poverty Alleviation Fund (PPAF), Karandaaz Pakistan - funded by UK's Department for International Development (DFID) - and KfW, a German government-owned development bank – have contributed to the institution’s capital in addition to providing subordinated loans. PMIC is distinctly positioned as an apex lending institution for the microfinance sector, in addition to its role to develop the sector and facilitate the evolution of the eco-system. PMIC’s target market includes 37 institutions - 26 NBMFIs and 11 MFBs. Of these, the company has developed relationships with 20 MFIs and the loan portfolio stood at PKR~18bln as of end-Sep’18. The company was able to grow its lending portfolio and is maintaining its quality. Additionally, PMIC is in the process of developing lending relationships with MFBs and has already engaged one MBF. PMIC plans on expanding its microfinance lending portfolio to PKR~28bln by CY19. The company board has also approved Microfinance Plus initiatives targeted towards agri-value chains, enterprise development, micro-insurance, renewable energy, among others. Several pilot projects are underway. Funding sources comprise of subordinated loans from sponsors, and market borrowings; market-based funding is projected to comprise a sizable portion of the institution’s overall funding, going forward. The company's operations have been designed on efficient lines with a strong control environment. Notable developments in the overall structure and risk environment alongside operational efficiencies are yielding healthy revenues. Going forward, the trend is expected to remain the same.


The ratings are dependent on the expanding loan portfolio while initiation of the Microfinance plus products, experienced team, the company’s ability to sustain credit quality is considered important; maintaining a strong control environment remains central to the company’s performance and hence the ratings. The sponsor support is a positive for the ratings.

About the Entity
PMIC, incorporated in August 2016, is licensed to carry out Investment Finance activities as a Non-Banking Financial Company (NBFCs) under the NBFC Rules 2003 and NBFC Regulations 2008. The strong sponsors, PPAF (49%), Karandaaz (38%) and Kfw (13%), strengthen the financial profile of PMIC, enabling it to meet its objectives of enhancing liquidity of microfinance sector. The Company operates through its head office in Islamabad.

The board comprises seven members, including two representatives of PPAF, and one each of Karandaaz, and KfW, while two directors are independent. The board is chaired by Mr. Naveed A. Khan, a leading banker, carrying more than 30 years of experience at various senior positions. Mr. Yasir Ashfaq, CEO of the company carries experience of more than ~20 years. Key management positions are held by qualified and experienced individuals. Most of them have a lengthy association with the microfinance sector in general, banking and PPAF in particular.