Dear Srinivasan,
Thank you for your comments. We look forward to an on-going dialogue on MFI tier definitions in order to find the appropriate metrics to classify MFIs in a meaningful, yet practical manner.
In developing this tier system, we saw it as a first step in moving the industry towards greater consensus around more precise definitions. While we were able to get valuable feedback from different individuals prior to publishing this paper, we remain open to hearing additional commentary to further refine these definitions.
If you or others have additional feedback on this tier system, please feel free to contact me (becca@microrate.com).
Best regards,
Becca
| Rebecca Spradlin |
From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of N. Srinivasan
Sent: Thursday, April 18, 2013 11:43 PM
To: MicrofinancePractice@yahoogroups.com
Subject: Re: [MFP] MicroRate White paper- MFI Tier Definitions
Dear Becca
Thanks for this white paper. The aspects relating to size and transparency need more detailed attention. Size in terms of number of customers served is an important consideration - not just the financial volumes. Neither supervision nor audit ensure transparency. Transparency is not an objectively determinable factor. It should be defined differently (extent of information put out in public domain, level of participation of different stakeholders in the processes of the MFI and the effort taken to make customers aware of the products and services availed from the MFI). Pricing transparency is one of the aspects that could be considered.
More work needs to be done on this before we can conclude that 'three simple, objective indicators that, together, act as proxies for MFI maturity'
Regards
Srinivasan
From: Becca Spradlin <becca@microrate.com>
To: MicrofinancePractice@yahoogroups.com
Sent: Thursday, 18 April 2013 10:21 PM
Subject: [MFP] MicroRate White paper- MFI Tier Definitions
Dear Colleagues,
MicroRate has just released a white paper defining MFI tiers. To download this paper, go to: http://www.microrate.com/downloads/86 .
Historically, the microfinance industry referenced a system of three or four "tiers" to differentiate between MFI types. However, previous tier definitions – often vague or based only on one indicator such as size – failed to adequately capture an MFI's level of institutional development.
The tier system proposed is based on a three-tier structure that applies three simple, objective indicators that, together, act as proxies for MFI maturity. The three indicators are sustainability (return on assets, RoA), size (total assets in U.S. dollars) and transparency (level of regulation/reporting).
MicroRate is grateful to all of those who provided feedback on this tier system. In particular, the e-MFP Action Group of Investors in Tier 2/3 MFIs was very supportive in giving feedback and helping to disseminate this work.
Best regards,
Becca Spradlin
| Rebecca Spradlin |
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