The Hindu Business Line : Credit rating scheme for SSI sector launched

The Finance Minister, Mr P. Chidambaram, with the Minister for Small Scale Industries, Mr Mahabir Prasad, at the launch of the credit rating scheme for SSIs in the Capital on Thursday. — Kamal Narang

New Delhi , April 7

THE Finance Minister, Mr P. Chidambaram, on Thursday launched the first credit rating system for small and medium scale enterprises. The move is aimed at ensuring higher availability of bank and institutional credit to the SME sector. He had promised during his Budget that such a system would be set up.

The nodal agency for the project would be the National Small Industries Corporation. Speaking at the occasion, the Minister said that the misconception that the sector is dying must end, as it is a vibrant one.

``The popular misconception about SSI is that the sector is dying and SSI units are closing down every day. But facts speak otherwise,'' he said, adding the sector can become an engine of growth with infusion of more capital and credit.

``Number of SSIs is increasing, their turnover has grown, number of people employed by them is rising and exports from the sector have gone up significantly. Only credit is stagnant or declining,'' Mr Chidambaram said.

The SSI sector accounts for 40 per cent of the industrial production while it gets only 10 per cent of bank credit.

As of now there are 1.13-crore such units in the country employing 2.7-crore workers.

According to the scheme, the Government will provide up to 75 per cent subsidy to SSIs getting themselves rates by any of the six agencies — Crisil, ICRA, CARE, Fitch, Dun & Bradstreet and Onicra, subject to some ceilings.

Mr Chidambaram said credit was denied to many small units as most of the bank officials either lacked expertise or did not show inclination to assess credit-worthiness, as they were being risk averse.

This was the same reason why banks refused credit to farmers, students and artisans, he said, and added ``we have been able to change the mindset of banks on farm credit. We will do it for SSIs also.''

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