Press Release

VIS Upgrades Entity Ratings of Rural Community Development Programmes

Karachi, May 02, 2024: VIS Credit Rating Company Limited has upgraded Rural Community Development Programmes (‘RCDP’ or the ‘Institution’) medium to long term rating to ‘BBB+' (Triple B Plus) from ‘BBB’ (Triple B), while maintaining short-term rating at ‘A-3’ (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 'A-3' indicates satisfactory liquidity and other protection factors qualify entities/ issues as to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings is ‘Stable.’ Previous rating action was announced on April 26, 2023.

In 1998, Rural Community Development Society (RCDS) was formed to provide integrated development services to the impoverished and neglected communities in Punjab, Pakistan. Subsequently to abide and comply with regulations, RCDS underwent a spin-off process and separated the microfinance and social development aspects; microfinance segment was taken into a new entity by the name of Rural Community Development Programmes (RCDP) while the social development aspects were retained within RCDS in 2016. RCDP is limited by guarantee having no share capital. The principal activity of the Institute is to provide cost effective micro finance services to needy persons in order to enable economic participation. In addition, the Institution also provides services in the form of training, both to its clients and staff. The registered office of the Institution is situated in Lahore.

The ratings assigned to the Rural Community Development Programmes (RCDP), encompass implicit support from its parent entity, the Rural Community Development Society (RCDS), both on financial and technical fronts. The ratings reflect a positive trajectory marked by improvement in asset quality metrics and the absence of significant portfolio losses despite prevailing macroeconomic conditions. Of significance is the momentum in disbursement activities, culminating in the expansion of the micro-credit portfolio. Strategically, a cautious approach underpins the growth trajectory, characterized by a shift towards individual loans while profitability has seen a significant improvement despite notable write-offs and heightened operating expenses attributed to network expansion initiatives. In the face of challenging macroeconomic dynamics characterized by persistent inflationary pressures impacting clients' disposable incomes and repayment capacities, the maintenance of asset quality is important from a ratings perspective.

Furthermore, the ratings incorporate the allocation of funds towards lending activities alongside the repayment obligations of international borrowings, although concerns arise from a weakening liquidity position over the assessed timeline. Nonetheless, the Institution benefits from a sizable capital adequacy ratio, reflecting sufficient room for growth. Given the management's pursuit of an expansion agenda, the forthcoming impact on operating self-sufficiency (OSS) and overall profitability metrics are pivotal for future ratings assessments.

Overall, the combination of prudent financial management, strategic adjustments, and improvement in key performance indicators has supported RCDP for an upgrade in its Long-term rating. Nevertheless, the management's ability to maintain spreads, liquidity indicators, and healthy disbursement activities will be crucial factors in sustaining the assigned ratings moving forward.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at

Applicable Rating Criteria:
Non-Bank Financial Companies
VIS Issue/Issuer Rating Scale

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