Rating Details	Rating Type	Social Impact and Performance Rating
	Dissemination Date	Current (13-Dec-22 )
	Action	Initial
	Rating	SIP3++
	Outlook	Stable
	Rating Watch	-

Rating Rationale	Factor	Comment
	Ownership/Members	RCDP has three members, who have each given a guarantee of up to PKR 100,000 in case of a possibility of default.
	Governance	RCDP has strong governance structure backed by a board of directors comprising of eight members including three independent directors. Board committees having independent representation provide additi
	Management	The senior management is qualified and experienced to manage business operations in an efficient manner. Turnover at senior management level is low.
	Social Impact	The target community is well-specified; however, the mission statement may be improved to capture defined and measurable targets. RCDP may publish social indicators while increasing the reporting freq
	Business Sustainability	Following the expansion strategy, there is an influx of new clients and growth in gross loan portfolio and average loan size, while the mark-up income also increased compared to FY21.
	Financial Sustainability	RCDP is relying on borrowing as the primary source of funding, and the minimum lending rate margin has declined due to a surge in the benchmark rate in FY22. However, the equity of ~PKR 2.5bln generat

Key Rating Drivers

Rural Community Development Programme (‘RCDP’ or the 'Company') was formed with the aim to help poor people to improve their livelihood options through the delivery of appropriate and viable microfinance services. RCDP is focused on reducing the barriers to financial inclusion with the expansion of loan portfolios using technological platforms and branchless banking. RCDP provides extensive training to its employees and educates clients on a regular basis. The management may present the client grievance report to the board of directors on a quarterly basis. The depth of the environmental and social management policy may be enhanced further while clearly defining the social impact targets and also having approval from a board-designated committee or BoD itself. Going forward, RCDP’s actions toward its goal of social and economic uplift of marginalized communities will be important from the rating perspective. Rationalization of operating expenses and access to funding sources would be critical.

About the Entity
	Legal Structure	Not-for-profit organization (Section-42)
	Year of Establishment	03-Nov-15
	Type of License	Non-banking Microfinance Company (NBMFC)
	Majority Ownership	N/A

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Afnan Iqbal afnan.iqbal@pacra.com +92-42-35869504 www.pacra.com	Methodology | Social Impact and Performance Rating | Sep-22	Sector Study | Microfinance | Sep-22

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