PACRA Upgrades Entity Ratings of Rural Community Development Programme

The rating upgrade underscores the continued enhancement of Rural Community Development Programmes (RCDP or “the Company”) operational structure and financial soundness, reaffirming its standing as a key institution within Pakistan's microfinance landscape. RCDP has exhibited enhanced franchise stability and financial resilience, supported by a mission-centric business model emphasizing financial inclusion, rural outreach, and women empowerment. The Company's Gross Loan Portfolio (GLP) stood at PKR 11 bln as of Mar’25 (Mar’24: PKR 9.3 bln), marking a YoY growth of 18%, underpinned by deepening branch outreach and strong borrower retention. The Company's borrower base remains highly targeted, with approximately 98% female and 65% rural clientele, reinforcing its developmental mandate and niche positioning within the financial inclusion ecosystem. Earnings metrics have shown marked improvement. Markup income rose to PKR 3.2bln, while net profit increased to PKR 88 l mln (Mar’24: PKR 496mln), translating into strengthened internal capital generation. Operational self-sufficiency has also strengthened, reflecting enhanced earnings capacity relative to operating expenses. As a result, the equity base increased to PKR 4.7bln (Mar’24: PKR 3.5bln), enhancing the Company's funding capacity and balance sheet strength. RCDP's liquidity risk remains well-contained, supported by positive operating cash flows and a prudent asset-liability profile. Non-performing loans remain at low and manageable levels, reflecting continued credit stability within the portfolio. The Company continues to exhibit a stable funding mix and a conservative approach to leverage, aligning with best practices for financial sustainability in the microfinance sector. Governance practices remain well-structured and effective. A well-constituted Board, comprising seven members with active participation from independent directors, ensures effective oversight. Key risk governance functions Risk Management, Compliance, and Internal Audit operate independently, enhancing operational discipline and internal control mechanisms. The Company maintains a clear organizational structure and exhibits prudent credit underwriting and portfolio monitoring practices. The ratings incorporate RCDP's exposure to inherent microfinance sector risks, including credit risk, policy uncertainty, and macroeconomic vulnerabilities. Nevertheless, the Company's sound risk controls, conservative financial policies, and targeted lending approach underpin its credit risk profile. The rating is influenced by the company's capacity to grow amid a challenging financial landscape. Key determinants include consistent expansion in its clientele, portfolio, and sustainability, as well as .a strong liquidity framework and alignment between actual performance and financial projections.
Going forward, the rating remains contingent on the Company’s ability to sustain portfolio growth amid a challenging operating environment. Continued expansion of the client base and loan portfolio, alongside measurable enhancements in operational sustainability, will be key credit considerations. The effectiveness of the Company’s liquidity framework and the alignment of actual performance with financial projections will remain critical determinants of the rating trajectory.

About the Entity
Rural Community Development Programme (RCDP) is a not-for-profit, public unlisted company established in 2015 under Section 42 of the repealed Companies Ordinance, 1984. Its origins date back to 1996 with the founding of Rural Community Development Society, highlighting a long-standing dedication to rural development. The Company is overseen by an eight-member Board of Directors, led by Chairperson Ms. Ayesha Gulzar, while Mr. Muhammad Murtaza serves as the CEO. Headquartered in Lahore, RCDP operates a network of 160 conventional branches and 32 Prime Minister Interest Free Loan (PMIFL) branches under its SECP license, complemented by training programs designed to enhance economic resilience in the communities it serves.