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Credit rating for SMEs - why not?
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Bikky Khosla | 31 Aug, 2010
With the government exploring ways to facilitate easier credit to small and medium enterprises (SMEs), I feel SMEs too should make some effort so that they are able to get loans easily without running from pillar to post. And one such initiative which they can take up is getting themselves rated.
With more than 14 lakh SMEs it's an irony of sorts that only a pitiful 8.5% of bank loans go to them. The basic reason being that most SMEs are from the unorganised sector, thus their credibility is apparently questionable. Recent trends show that only established SMEs were able to get finance, though at a higher rate.
While the government has on many occasions insisted that 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, rating invariably serves as a trusted third party opinion on the creditworthiness of these companies.
The logic is simple: A good rating helps SMEs in obtaining faster and concessional credit from banks. So undertaking credit and performance rating from a reputed and accredited independent rating agency, I believe, is energy rightly spent. I think SMEs should do away with the fear that they may not get a good rating and come out and be counted. They need to understand that with a rating, banks and other financial organisations will be more comfortable while dealing with them and it will also reduce the interest rates payable by a couple of points.
SMEs also need to look from the point of view of the bank. For banks, lending to a rated SME would reduce their capital charge as against lending to an unrated SME. In addition, banks need to have a benchmark to compare their own credit assessment. So credit rating seems to be the only possible route. And what's more, 75% cost subsidy through the National Small Industries Corporation is being given by the government for getting a credit rating for the first time. So what's pulling us back? After all, it will benefit us solely!
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Credit rating
NAGESHWANT ROY VAID | Mon Sep 13 10:20:37 2010
Extremely pertinent and topical issues have been qualified.It is essential to do a barometric certification of SME's so that the status is known and respected.Apart from credibility which becomes a known factor, banks will deal with a graded client base more confidently.
Credit rating
NAGESHWANT ROY VAID | Mon Sep 13 10:20:19 2010
Extremely pertinent and topical issues have been qualified.It is essential to do a barometric certification of SME's so that the status is known and respected.Apart from credibility which becomes a known factor, banks will deal with a graded client base more confidently.
LOAN REQUIRED
JIGNESH HIRPARA | Sun Sep 5 11:36:15 2010
DEAR SIR,
WE HAVE STARTED MATERIAL TESTING LABORATORIES. WE HAVE REQUIRED LOAN FOR LABOARTORIES.
SO PLEASE NEEDFUL FOR THIS PROCESS.
REGARDS,
JIGNESH HIRPARA
9879588557
RAJKOT
credit rating.
anil goel | Fri Sep 3 04:15:03 2010
we get loan only when we have pull in bank.
this apply to business lending but for car loan you get without pull. i can get car loan for 10lakh in a day but for buying new machine of 5 lakh , iam not sure how many days it will take.
any body can take credit card...but not bank loan..
point is policy is to give loan for expenditure not for making money.
this is problem
credit rating.
anil goel | Fri Sep 3 04:09:26 2010
we get loan only when we have pull in bank.
this apply to business lending but for car loan you get without pull. i can get car laon for 10lakh in a day but for buying new machine of 5 lakh , iam not sure how many days it will take.
any body can take credit card...but not bank loan..
point is policy is to give loan for expenditure not for making money.
this is problem
reg., the costs and the subsidy thereon ... fantastic!!!
vinay d. maheshwari | Fri Sep 3 02:32:03 2010
we know how difficult, time-consuming and i'mpractical it is for an SME to get the rating first keeping in mind the costs, the documentation and other complications ... and, then the time costs bureaucracy involved in getting the subsidy??? cool!
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Re: reg., the costs and the subsidy thereon ... fantastic!!!
SMA | Fri Sep 3 15:19:19 2010
My dear frnd I think u r not aware that the rating fees is very less, and rating process is simplyfied. And the subsidy is upfront, u need not follow with govt for it, u have to pay only 25%, 75% will be collected by rating agency directly from Govt. The rating costs Rs. 70000 to 13000 (after subsidy deduction), depending on the turnover of the company.
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SME N BANK
SIRAJUDEEN MUHAMMED | Wed Sep 1 10:43:49 2010
I TOOK CASH CREDIT FROM UNION BANK, I RUN AGRICUTURAL UNIT(PROCESSING) I AM LOOKING ALL MATTERS BECAUSE IT IS MEDIUM UNIT,RECENTLY I LOOK IT AT BANK STATEMENT THEY ARE CHARGING 15% ( INT CHEUQUE STATMENT DELY PROCESSING TA TO CM MY EXP TO GO BANK TIME DELY COURIER CHARGES)
IT IS ACTUAL I CAN PRODUCE PROOF
Harish Nagpara | Wed Sep 1 05:36:19 2010
Good guidance to small industries. Actually they are helpless manytimes to expand & provide good quality products in the markets due not availibility of the fonds. But if they get credit rating with 75% subsidy, must go for that to avail more & cheaper fund to explore themselves.
Credit Rating for SME's
SME | Wed Sep 1 04:59:41 2010
The problem with credit rating is that it is too expensive for SME's to opt for it, thats one of the major reasons many co's even the ones who are interested dont go for this service.
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Re: Credit Rating for SME's
Ravindra Kumar | Wed Sep 1 06:52:51 2010
What is the cost for obtaining credit rating? which are the agencies authorised to give credit rating? Is there any gaurantee that after getting it. banks are bound to offer hassle free loans etc.?
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Re: Re: Credit Rating for SME's
Bilal | Wed Sep 1 07:33:45 2010
For Turnover < 50 Lacs its,7,500 Service tax after 75% subsidy from NSIC.
For Turnover 50 to 200 Lacs its, 9,000 Service tax after subsidy.
For Turnover > 200 Lacs its, 12,000 Service tax after subsidy.
Agencies authorized to give credit rating are SMERA (Its a joint initiative by SIDBI (Small Industrial/Service Development Bank of India), Dun & Bradstreet Information Services India Private Limited (D&B) and 12 banks leading in financing SMEs in the country), CARE, FITCH, ICRA, CRISIL & ONICRA.
SMERA is the country's first Rating agency that focuses primarily on the Indian Micro, Small and Medium Enterprise (MSME) segment.
-Ratings have enabled banks/ lending institutions in reducing their turnaround time in processing credit applications from the MSME units, thus providing applicants access to timely and adequate credit.
-Better Ratings has started benefiting MSME units by way of favorable borrowing terms, such as:
* Lower collateral requirements
* Reduced Interest Rates
* Simplified lending norms
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Re: Re: Re: Credit Rating for SME's
Pooja | Tue Sep 21 12:09:49 2010
dear sir,
kindly note its not SMERA but CRISIL LTD who is the first and the leading Credit Rating agency.i would appreciate if you can please verify your details before suggesting this at public portal.
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Re: Re: Credit Rating for SME's
Charu Dutt Sharma | Wed Sep 1 08:02:10 2010
DearAll
Please check the website www.smera.in . The rating fee for SMEs are not at all costly. The SMERA Ratings fee are in range of Rs. 8273 to Rs. 52994. Further there are subsidy in case of registered SME enterprise.
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Re: Credit Rating for SME's
MD - Class ent. | Thu Sep 16 07:56:22 2010
I recently got my company rated through ICRA and got the benefits of lower interest rate and faster sanctioning of loan. Their rating fee starts from Rs 5000 to Rs 13000
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Re: Re: Credit Rating for SME's
Ravinder Chadda | Thu Sep 16 08:24:09 2010
Can you give us the contact of icra
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Re: Re: Re: Credit Rating for SME's
Ravi | Wed Sep 22 06:43:49 2010
Please visit www.icra.in website to know more about product and price
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Re: Re: Re: Credit Rating for SME's
Jeya Kumar | Thu Dec 23 06:25:51 2010
Contact Chennai ICRA SME Ratings
044-65159190 or 09940645810
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Credit Rating for SME's
SME | Wed Sep 1 04:59:28 2010
The problem with credit rating is that it is too expensive for SME's to opt for it, thats one of the major reasons many co's even the ones who are interested dont go for this service.
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Re: Credit Rating for SME's
Charu Dutt Sharma | Wed Sep 1 08:03:07 2010
DearAll Please check the website www.smera.in . The rating fee for SMEs are not at all costly. The SMERA Ratings fee are in range of Rs. 8273 to Rs. 52994. Further there are subsidy in case of registered SME enterprise.
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Credit Rating for SME
Bhakti | Tue Aug 31 11:53:52 2010
Yes Credit rating is very essential and benefial too.
It will generate more employment and will open new door of transperency in indian economy
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Re: Credit Rating for SME
ANIL THAKKAR | Wed Sep 1 03:18:04 2010
i like this issue & in this time small cap business suffered financial crises .& its solution increasing company Credit Rating
***BIOINAS PHARMACEUTICALS PVT LTD.
Anil Thakkar
M.D
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Re: Credit Rating for SME
S K Singal | Wed Sep 1 16:55:19 2010
It is not accepted by any Bank for any practical purposes ! Why should such high costing rating be sought by SMEs ?
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Re: Credit Rating for SME
Md Nazir Ansari, Managing Director, Kahkasha Group of Companies | Thu Sep 2 11:22:02 2010
Dear All,
This editorial was take away home. Thanks for useful and efficient knowledge transfer.
Generally banks provide loans on 2 factors
1. Credit rates
2. Good will
Latter is only posibble if only you know the bank manager personally. If in case u dont know we are left with Credit Rating. So i think we should make use of this scope and make our ideas come true.
Regards,
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