With the number of microfinance institutions increasing by the day, banks, financial institutions and other donors are looking at the ratings before they sanction funds.

The UN has declared 2005 as the year of microcredit aiming to in-crease awareness of microfinance in achieving economic and human development goods. Microfinance Institutions (MFIs) have managed to thrive in a space, which has hardly been touched by the banks-giving credit to the low-income families. With a majority of the population in the developing countries like India, providing them credit is all the more important in human development.

Microfinance is growing at more than 100% in India. "The role of independent rating becomes important as banks and financial institutions have started showing interest in lending their funds to meet the demand of MFIs," says Dr. Shankar Datta, MD of Basix. The growth of microfinance sector- with many new MFIs coming up- has necessitated the flow of capital from many mainstream institutions into these agencies.

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