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

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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 VP of Programs | MicroRate Inc. becca@microrate.com | www.microrate.com 1.703.243.5340 ext. 12 | becca.waskey (skype)