JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the entity ratings of Khushhalibank Limited (KBL), Pakistan’s largest microfinance Institution, to ‘A’ (Single A) from ‘A-’ (Single A Minus) for the medium to long-term and A-1 (A One) from A-2 (A Two) for the short-term. The ratings reflect Khushhalibank’s ability to withstand tough operating environment and maintain its market standing. It also highlights KBL’s position as one of the largest microfinance bank operating in the MFB sector in Pakistan.

Commenting on this development Ghalib Nishtar, President, Khushhalibank stated “The ratings reflect Khushhalibank’s adequate capitalization and extensive industry experience of its board and senior management. The ratings underscore the bank’s sound understanding of the microfinance sector and its meticulous due diligence and monitoring system.

KBL was established in the year 2000 with the primary objective to provide sustainable microfinance services to the poor in order to reduce poverty and promote economic development through community building and social cohesion. The bank operates through a branch network of 109 branches spread across 76 districts nationwide.

The recent devastating floods in Pakistan had washed away millions of hectares of crops, submerged villages and destroyed roads and bridges causing massive damage to the agriculture sector and affected portfolio of microfinance Institutions including KBL, given the concentration of loans the bank has in the agricultural sector. However, Khushhalibank is well capitalized and was able to sustain the impact of floods and has reinvigorated its lending efforts to the clients after the floods receded.

Given the need for alternate funding sources, Khushhalibank has also made concrete efforts in this regard by launching full service commercial banking services, expanding its network, improving its delivery channels and further introducing new customer-focused liability products and services. This expansion demonstrates the bank's commitment to mobilize retail deposits while reducing dependence on relatively expensive commercial borrowings. The microfinance organizations’ operational self sufficiency, improvement in transparency and raise of governance standard played a key role in the upgrading of the entity ratings.