Press Release
VIS Reaffirms Entity Ratings of Rural Community Development Programmes
Karachi, May 26, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Rural Community Development Programmes (‘RCDP’ or the ‘Institution’) at 'BBB+/A3' (Triple B Plus/A Three). Medium to long term rating of 'BBB+' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short term rating of 'A3' indicates fair likelihood of timely repayment of short-term obligations with satisfactory liquidity factors. Outlook on the assigned ratings remains ‘Stable.’ Previous rating action was announced on May 02, 2024.
RCDP, a not-for-profit NBFC established in 2015 as a spin-off from Rural Community Development Society (RCDS), provides microfinance services to underserved communities across Punjab. Headquartered in Lahore, RCDP operates 131 conventional and 31 Prime Minister Interest Free Loan (PMIFL) branches under SECP license, alongside training programs to support economic resilience.
The Institution has demonstrated a stable credit profile, supported by its strong governance framework, experienced leadership, and consistent financial performance. The Institution's focus on microfinance services for underserved populations, particularly in rural areas, underscores its commitment to financial inclusion and community development.
RCDP's loan portfolio primarily comprises small to medium-ticket loans, with focus on individual lending to mitigate risks associated with group lending. The Institution maintains a disciplined loan approval and collection process, which includes thorough client assessments and regular follow-ups, contributing to stable asset quality. Despite the challenging macroeconomic environment, RCDP has managed to keep non-performing loans at minimal levels. The introduction of new loan products, such as the Female Auto Rickshaw loan, reflects RCDP's innovative approach to addressing the needs of its clientele, particularly women.
Liquidity and funding remain well-managed, with the Institution maintaining adequate liquid assets to cover short-term obligations. RCDP relies heavily on borrowings for funding, but its ability to secure long-term financing from reputable sources, including international lenders, provides stability. The Institution's profitability has shown improvement, driven by higher yields on earning assets and effective cost management. Operational self-sufficiency has also strengthened, indicating RCDP's ability to sustain its operations without external support.
Capitalization is sound, with a strong reserve base and a high capital adequacy ratio, providing ample buffer for future growth. Going forward, the ratings will depend on RCDP's ability to maintain asset quality amid portfolio expansion, effectively manage liquidity and diversify funding sources, and sustain profitability in a potentially volatile economic environment. The successful execution of its growth strategy—including the introduction of new products and the securing of planned funding—will also be critical. Continued strong governance and sound risk management practices will remain essential for maintaining the ratings.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Non-Bank Financial Companies
https://docs.vis.com.pk/Methodologies%202024/NBFCs202003.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf