Financial Daily from THE HINDU group of publications
Thursday, Sep 01, 2005
Financial Daily from THE HINDU group of publications Thursday, Sep 01, 2005 |
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Industry & Economy
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SSI Crisil launches SME rating service Our Bureau
Mumbai , Aug. 31 CREDIT Rating and Information Services of India Ltd (Crisil) has launched the country's first small and medium enterprises rating service. The rating is expected to provide credibility to SME units and also give banks a tool to assess the risk of lending to this sector. Mr R. Ravimohan, Managing Director and CEO, Crisil, said an independent rating could help SME units avail themselves of credit at better rates. "The rating product will be a tool for self-correction and advertising for SMEs," he said, during the launch. To begin with, Crisil will rate firms having up to Rs 100 crore turnover for one year, said Ms Roopa Kudva, Executive Director and Chief Rating Officer, Crisil. "Credit rating will make access to credit easier for SMEs and will take out the uncertainty about the sector," she said. The rating will be based on parameters such as market position, operating efficiency, existing financial position, projected financial position and management evaluation. The units will be rated on a scale of SME 1 to SME 8, which will indicate the level of creditworthiness of the unit in relation to other SME units. Banks too will benefit from the rating service, said Mr Cherian Varghese, Chairman and Managing Director, Union Bank of India, who was the chief guest at the launch. Once banks adopt the Basel-II norms in 2006, banks will have to get their non-retail assets, above Rs 5 crore rates by an external agency. "The Finance Minister has announced that credit outlay to the SME sector should increase from Rs 67,000 crore to Rs 1,35,000 crore by 2009, because this sector offers the largest employment. The rating will give such units confidence." Union Bank's advances to the SME sector is approximately Rs 6,000 crore, out of total advances of around Rs 41,000 crore, and has targeted a year-on-year increase of 25 per cent in the SME segment. The bank is planning specialised desks for SME units at regional offices so that requests for credit can be disposed faster. "For SMEs, the issue is not merely the pricing of the loan, but also fast disposal of the loan," said Mr Varghese.
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