The Pakistan Credit Rating Agency Limited
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Jibran Cheema

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PACRA Assigns Initial Entity Ratings to JWS Pakistan

Rating Type Entity
(08-Apr-20 )
Action Initial
Long Term BBB-
Short Term A3
Outlook Stable
Rating Watch -

JWS Pakistan ('JWSP' or the 'Institution') is a Microfinance Institution (MFI) governed by the Securities & Exchange Commission of Pakistan (SECP) under Section 42 of the Companies Act, 2017. The Institution is licensed to operate under NBFC (Establishment and Regulations) Rules, 2003, Non-Banking Finance Companies and Notified Entities Regulations 2008. It has been in operations since 2015. The key element is that MFIs are not permitted to mobilize deposits, while they are also not backed by any stakeholder equity due to their status of "Companies Limited by Guarantee". These two elements, in combination, provide funding constraints, while they also delimit the boundaries of risk. JWSP 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 Institution is adequate, therefore, integral generation of capital is occurring at a decent rate. Second major source of funding is borrowings. The Institution majorly relies on local avenues for borrowings primarily PMIC. Governance structure takes strength from the body of members and board of directors. The ratings also incorporate the vulnerability in business due to low market share and limited geographical presence. Moreover, the growing impact of economic slowdown lately exacerbated by the global pandemic spread may deteriorate the overall risk profile of the Microfinance Sector, particularly with reference to the quality of assets and risk absorption capacity. Additionally, room for growth in technological domain exists. Overall financial risk profile displays a comfortable outlook with a fine credit quality.
The ratings are dependent on the Institution's aptness to sustain positive performance indicators amidst growth in business volumes. Meanwhile, the ratings would also monitor the impact of technological progression on the operational and risk efficacy of the Institution.

About the Entity
JWS Pakistan was incorporated in 2015 as a Public Company Limited by Guarantee under Section 42 of the Companies Ordinance, 1984 (now the Companies Act, 2017). It is also licensed by the SECP under the Non-Banking Finance Companies Rules, 2003. The overall control of the Institution vests with a seven member Board of Directors. Ms. Sabiha Shaheen is the Chairperson of the Board, while Mr. Qazi Shoaib Alam Farooqi is the CEO of the Institution.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.