Lahore, August 24, 2020 (PPI-OT): Agahe Pakistan (‘Agahe’ or the ‘Company’) is a Microfinance Institution (MFI) governed by the Securities and Exchange Commission of Pakistan (SECP) under Section 42 of the Companies Act, 2017. The Company 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 is a not-for-profit organization, hence, the source of funding comprises a) loans (b) grants and (c) internal generation of profits. Profitability of the company is growing at a moderate pace, therefore, integral generation of capital is occurring at a modest rate too. The company relies on diversified avenues for borrowings primarily from Commercial Banks and PMIC, wherein SECP’s Relief Package for deferment of loan repayment has been granted to the Company by PMIC. 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 low market share (GLP: PKR~687mln – End-March’20) and limited geographical presence in the Southern Punjab. Moreover, the impact of economic slowdown lately exacerbated by the global pandemic spread has cast a rippling effect on different sectors of the country. Microfinance industry is also expected to absorb the impact as disbursement, recoveries and liquidity patterns of each players may be influenced. Agahe’s liquidity position remains comfortable.
The ratings are dependent on the Company’s aptness to uphold its business and financial risk profile under the prevailing volatile macro-environment. Sustenance of growth momentum is imperative. Meanwhile, “Watch” reflects the need to oversee the risk profile of the Company against unavoidable challenges, particularly emanating from economic meltdown and repercussions due to COVID-19.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com