Financial Daily from THE HINDU group of publications
Saturday, Feb 11, 2006
Financial Daily from THE HINDU group of publications Saturday, Feb 11, 2006 |
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Money & Banking
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Credit Rating Industry & Economy - SSI `Get rated, access cheaper loans' N.S. Vageesh
Chennai , Feb. 10 LARGE companies mop up money at rates close to 7 per cent. For small and medium-scale enterprises, banks charge 12-13 per cent interest. This gap of nearly 6 percentage could soon narrow to around 3 if small companies opt for credit rating, says Mr Rajesh Dubey, Chief Executive Officer, SME Rating Agency of India (SMERA). A credit rating from SMERA helped one unit get nearly 2.25 per cent reduction in interest rate — from 11.5 to 9.25 per cent. Mr Dubey said many banks had already issued orders linking interest rate to SMERA rating. There would be at least 0.25 per cent reduction in interest rate — that would mean about Rs 25,000 on a Rs 1-crore loan. The saving would more than cover the rating fee, Mr Dubey added. SMERA launched in September 2005 has completed about 75 rating assignments till date. Half of them were referrals from banks while the rest were direct applications from SMEs. SMERA would complete 300 ratings by March-end. Mr Dubey said the company expects to touch one lakh ratings in five years. The ratings, however, will not be available in the public domain. Twelve banks have tied up with SMERA so far. "Tying up with SMERA and getting the SMEs rated by us, supplements the internal appraisal that may have been done by banks. Ratings by neutral agencies help address the fear psychosis of officers on lending decisions," Mr Dubey said. Banks were found more willing to lend to large accounts as there was a consortium approach On the other hand, for smaller accounts, the responsibility rested squarely on the lending officer. An independent rating would enable faster and more transparent decision-making, he said.
Related Stories: More Stories on : Credit Rating | SSI
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