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Rating Scale

E.Watch Rating Scale is based on the common rating grade classification for all microfinance rating agencies in the world.The Grading is a symbolic indicator of E.Watch's current opinion on the relative capability of the Microfinance Institution (MFI) concerned to manage its microfinance activities in a sustainable manner. A grade is assigned on a scale of 5 to 1 stars, defined by the level of commitment and the social performance management systems in place:

 

E.WatchRating Grade: *****

Common Rating Grade classification: Excellent

Rating Summary

Current institutional, operational and financial performances are excellent to optimal when compared to industry standards. Medium and long-term plans are well-designed, execution capacity is very good, and goals are very likely to be achieved. Short and medium term risks are minimal and/or well managed. Long-term risks are adequately monitored and anticipated. Changes in the economic, political or social environment should have a limited impact on the institution’s financial condition given its ability to quickly adjust its strategies and/or take corrective actions.
 

E.WatchRating Grade: ****

Common Rating Grade classification: Good

 

Rating Summary

Current institutional, operational and financial performances are satisfactory when compared to industry standards. Medium and/or long-term plans are adequately designed, execution capacity is good and goals are likely to be achieved. Short and medium term risks are low and/or well managed. Areas for improvements have been identified and are being addressed. Changes in the economic, political or social environment might have an impact on the institution’s financial condition that should however remain moderate.
 

E.WatchRating Grade: ***

Common Rating Grade: classification: Good

 

Rating Summary

Current institutional, operational and financial performances are below comparable industry standards. Short and medium term risks are moderate-high but are not fully addressed. Most areas for improvements have been identified, but medium and long-term plans miss one or several critical elements, execution capacity is weak and many goals are unlikely to be achieved. Most management processes and systems are in place but need to be refined or updated. The institution is vulnerable to major changes in the economic, political or social environment.
 

E.WatchRating Grade: **

 

High risk: Important weaknesses in operational and financial areas result in high institutional vulnerability and potential risk of default. Performance is very poor in several important evaluation areas.

 

E.WatchRating Grade:  *

Immediate risk of default: Existing operational and/or financial and/or strategic weaknesses create an outstanding risk of default. Performance is very poor in most evaluation areas.

 

E.Watchrating scales consist of:

- Microfinance PerformanceRating Scales (MPRS)

- Microfinance Social RatingScales (MSRS)

- Microfinance Financial Strength Rating Scales (MFSRS)

A complete framework of E.Watch rating grades of microfinance institutional will be published soon.