PACRA Upgrades Entity Ratings of AGAHE Pakistan
AGAHE Pakistan ('AGAHE' 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 2016. 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. AGAHE Pakistan is a not-for-profit organization, hence, the source of funding comprises a) loans (b) grants and (c) internal generation of profits. Over recent years, the Institution has sizably enhanced GLP which led to improved markup earned. In turn, net markup income augmented amply. Also, total income witnessed upsurge to PKR 193mln (6MFY21: PKR 138mln). Consequently, bottom line improved manifold. The Institute Institution relies on diversified avenues for borrowings primarily from Commercial Banks and PMIC. Financing agreement with PPAF for Revolving Fund has unique specifications and is strengthening the funding base. Institution's cost of funds remained under control. Upgrade in rating reflects significant growth in GLP and profitability, along with the financing agreement with PPAF for Revolving Fund. NPLs increased with the expiration of SBP’s deferment period. However, the same have been sufficiently provided for and infection ratio has recouped lately. Improvement in asset quality will remain an important factor in future. Liquidity profile of the Institution remains decent. Governance structure is derived from the General Body of Members and the Board of Directors. The ratings also incorporate the vulnerability in business due to market share. Room for growth in the technological domain exist.
Ratings also incorporate the Institution’s improved performance amidst economic slowdown lately exacerbated by the aftermaths of global pandemic spread. The same has been reflected in recouped infection ratio and enhanced GLP along-with profitability. Furthermore, Institution is adding more branches where cumulative number has surpassed 35. The ratings are dependent on the Institution's aptness to sustain positive performance indicators amidst growth in business volumes. Sustenance of growth momentum is imperative. Ratings will monitor expansion and the impact of technological progression on the operational and risk efficacy of the Institution.
AGAHE Pakistan was incorporated in 2016 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. Mr. Abid Aman Barki is the Chairman of the Board, while Mr. Barak Ullah is the CEO of the Institution. He is accompanied by a team of experienced professionals.