Press Release

VIS Reaffirms Entity Ratings of Rural Community Development Programs

Karachi, April 26, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Rural Community Development Programs (RCDP) at ‘BBB/A-3’ (Triple B/A-Three) with a ‘Stable’ outlook. The medium to long-term rating of ‘BBB’ denotes adequate credit quality coupled with reasonable and sufficient protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-3’ denotes satisfactory liquidity and other protection factors qualifying entity as investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. The previous rating action was announced on April 29, 2022.
The ratings assigned to RCDP take into account implicit support available from the parent organization, Rural Community Development Society, both on financial and technical fronts. The ratings take comfort from improvement in asset quality indicators in line with complete write-off of pandemic-induced delinquent portfolio carried out during the rating review period, coupled with no major portfolio losses incurred in the wake of recent floods. The ratings reflect positive momentum witnessed in disbursement activities resulting in the growth of the micro-credit portfolio. The growth strategy is marked by continuing caution with a complete transition of group to individual loans and reduction in loan ceilings introduced during pandemic retained; the same has reflected in notable recovery ratios coupled with negligible infection recorded in portfolio built during and post-Covid-19. However, the profitability position remained stressed during the review period on account of write-offs and high operating expenses incurred stemming from network expansion. Moreover, in line with distressed macroeconomic indicators with ongoing inflation putting a drag on clients’ disposable incomes and repayment capacities, maintenance of asset quality will remain important from ratings perspective.
The assigned ratings factor in ongoing efforts of the management in tapping international funding avenues; the same will assist the Institution in sustaining growth momentum, alleviating pressure on spreads through reduction in average cost of funding, and mitigating foreign exchange risk. On the other hand, owing to channeling of funds towards lending activities along with repayment of an international loan, the liquidity position has demonstrated weakening on a timeline assessed from quantum of liquid assets in relation to outstanding debt obligations. The ratings derive strength from sizable capital adequacy ratio, reflecting sufficient room for growth. Given the management is implementing an aggressive expansion plan; the impact of the same on operating self-sufficiency and overall profitability metrics will remain critical for ratings going forward. Moreover, ratings will remain contingent upon managing spreads and maintaining liquidity indicators while continuing healthy disbursement activities.
For further information on this rating announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext. 8010) and/or the undersigned at 021-35311861-64 (Ext. 306) or email at

Sara Ahmed

VIS Entity Rating Criteria: Non-Bank Financial Companies (March 2020)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .