SME Times - Credit Rating Not Necessary For MSEs to Get Loan, Credit Rating Not Necessary To Get Loan, Credit Rating Not Necessary To Get Loan For MSEs, Credit Rating For MSEs to Get Loan Not Necessary

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SME Times News Bureau | 24 Apr, 2010
Credit rating is not a necessary requirement for any Micro and Small Enterprises (MSEs) to get loan from Banks and Financial Institutions at economical rates, said Minister of State (Independent Charge) for Micro, Small and Medium Enterprises (MSMEs) Dinsha Patel in a written reply to a question in the Rajya Sabha.

However, credit rating serves as a trusted third party opinion on the creditworthiness of the MSEs and a good rating helps the MSEs in obtaining faster and concessional credit from banks.

Patel said, "The 'Performance & Credit Rating Scheme' is being implemented by the Ministry with the aim to encourage Micro & Small Enterprises (MSEs) to undertake credit and performance rating from a reputed and accredited independent rating agency."

Upto 31st March, 2010, a total of 19207 MSEs have been assigned rating under the Scheme and 1652 applications were under process with the seven empaneled rating agencies.

"Rating by an independent rating agency provides deep insight into MSE’s operations. It reveals the credit- worthiness of the company in relation to its peers in the sector, and an assessment of its strength and weakness, based on its financial conditions and performance. Thus a good rating by an independent rating agency helps the Banks and Financial Institutions in assessing the strengths and credit worthiness of MSEs and facilitating credit to them on easier terms," he added.

While detailing the works of small Industries to big companies, the minister said, "The allocation of rural electrification work to public sector undertaking like National Thermal Power Corporation (NTPC) has helped the Micro and Small Enterprises (MSEs) to increase their business especially in respect of supply of products like RCC-poles, cables, conductors, etc."

Under the existing policy, the public sector corporations including NTPC are required to extend benefits like issue of tender sets free of cost, exemption of payment of earnest money, waiver of security deposit, etc. to MSEs registered with National Small Industries Corporation (NSIC) under its Single Point Registration Scheme. Cases of non-compliance are taken up with the concerned Departments/Organisations for extending necessary benefits.