M-CRIL's Microfinance Rating - Risk Assessment - Urban Poverty Alleviation Program (UPAP) of NRSP

This 'M-Cril Microfinance Rating-Risk Assessment' of the 'Urban Poverty Alleviation Program' (UPAP) of Pakistan recommends the program for its high safety and good systems and assigns it a composite grading of alpha minus.

The report analyzes the following aspects of UPAP:

• Organizational profile;
• Operational highlights of the microfinance program;
• Financial ratios.

It finds that UPAP has performed:

• Well on the managerial front:
  • Professionally trained, committed and stable managerial cadre;
  • Very well developed management information system (MIS);
  • Good tracking system for overdues;
  • Well developed financial planning and control systems.
• Moderately in governance and strategy issues and has:
  • Long years of experience in microfinance;
  • Good second line of leadership;
  • Good expansion strategy;
  • Strong credit culture.
• Excellently on the financial front, exhibiting:
  • Excellent repayment rate and portfolio quality;
  • Productive deployment of assets in the loan portfolio;
  • Comfortable position on capital adequacy.

The report identifies the following weaknesses in UPAP:

• Low staff productivity;
• Lack of full involvement of the board;
• High operating expenses;
• Negative profitability.

M-CRIL states that UPAP has tremendous potential to become one of the leading microfinance institutions (MFIs) in South Asia on account of its:

• Institutional mandate and culture;
• Overall good performance;
• A commendable approach to sustainability and self-reliance as well as its growth plans.