Press Release
VIS Reaffirms Ratings of Basel 3 Compliant Tier-II (TFC-I) Instrument of Khushhali Microfinance Bank Limited
Karachi, April 30, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the rating assigned to TFC-I of Khushhali Microfinance Bank Limited (‘KMBL’ or the ‘Bank’) at ‘B’ (Single B). The long-term instrument rating of ‘B’ denotes payments are not being made as per original schedule. Future performance is less likely. The outlook on the assigned rating is ‘Negative.’ The entity ratings of KMBL have also been maintained at 'A-/A2' (Single A Minus/A Two). The previous rating action was announced on July 11, 2025.
The Bank has raised PKR 1.0 billion through rated, unsecured, subordinated and privately placed term finance certificates of worth Rs 100,000 each fully subscribed on March 19, 2018 to improve capital adequacy at the rate of 6-month KIBOR plus 2.05% per annum. The issue was for a period of eight years from the date of subscription and was scheduled to mature on March 19, 2026; however, the maturity payment remains outstanding. The issue has call option after 10th redemption date including lock-in and loss absorbency clause.
The assigned instrument rating takes note of the lock-in-clause having been invoked by SBP and resulting in missed coupon payment instances. With Capital Adequacy Ratio (CAR) breach continuing, further missed payments on coupons may occur. Therefore, the risk of conversion of both instruments into common equity remains high.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Micro-Finance Banks
https://docs.vis.com.pk/Methodologies-2025/MicroFinance-Nov-2025.pdf
Instrument Rating
https://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf