Credit ratings agency Crisil today said it had upgraded its ratings of two large MFIs and revised its outlook to positive for another on account of improved fund flows.

It said that fund flows to the microfinance sector have improved in recent months because of greater regulatory clarity and stable operating environment. In particular, lenders have shown preference for large and well-managed microfinance institutions (MFIs) operating outside Andhra Pradesh.

These MFIs have raised reasonable equity capital over the past few months, thereby enhancing the confidence of lenders and stakeholders.

Because of their adequate resource profile and capital position, CRISIL expects large MFIs based outside Andhra to resume their growth plans, though at a slower pace than before the Andhra crisis. CRISIL also expects the profitability of these MFIs to improve moderately, driven by resumption of growth, economies of scale, and healthy asset quality.

Taking note of these developments, Crisil has upgraded its rating on Equitas Micro Finance India Pvt Ltd and its wholly owned subsidiary, Singhivi Investment & Finance Pvt Ltd, to 'Crisil BBB / Stable' from 'Crisil BBB- / Positive'.

Crisil has also upgraded its rating on Ujjivan Financial Services Pvt Ltd (Ujjivan) to 'Crisil BBB / Stable' from 'Crisil BBB- / Stable', and revised its outlook on Janalakshmi Financial Services Pvt Ltd (Janalakshmi) to 'Positive' while reaffirming its rating at 'Crisil BB+'.