Press Release
Date: 13-Dec-22
PACRA Assigns Initial Social Impact and Performance Rating to Rural Community Development Programmes

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

Methodology | Social Impact and Performance Rating | Sep-22

Sector Study | Microfinance | Sep-22

Disclaimer This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA. 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 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.