Micro, Small and Medium enterprises (MSMEs) comprise a pivotal sector of the Indian economy, employing the largest work force among all sectors other than agriculture, promoting entrepreneurship, and contributing significantly to economic growth. However, even as its importance is widely acknowledged, the MSME sector has historically found itself deprived of timely and adequate institutional finance. The primary reason for this has been the lack of credible information on the functioning and performance of the MSME sector. One way to bridge this “information gap” and thereby improve the sector’s access to institutional finance is to encourage MSMEs obtain credit ratings from credible credit rating agencies. ICRA is one of the leading credit rating agencies in India, with a sound understanding of the MSME sector and its “real world” dynamics. It offers its MSME rating services in two ways:
NSIC ICRA Performance and Credit Rating Scheme
ICRA SME Ratings
For lenders, an ICRA MSME Rating would:
- Provide an objective, independent and reliable opinion on credit quality.
- Serve as an additional input in the credit decision making process.
- Assist in risk pricing and capital allocation.
- Facilitate portfolio management and monitoring.
For the rated MSME, an ICRA MSME Rating may help to:
- Improve the comfort level with prospective/existing lenders.
- Negotiate better terms on the basis of the credit quality reflected by the Rating.
- Reduce the time involved in obtaining loan approvals.
- Project a better image to prospective/existing trade partners.
- Carry out self-evaluation and take timely and corrective measures for improvement.
*An ICRA MSME Rating is valid for 12 months from the date it is assigned or the date of occurrence of any material development that would warrant a Rating surveillancewhichevercomes earlier. On surveillance, ICRA retain or revise. (upward or downward) the rating previously assigned, depending on its assessment of the development since the previous rating.
ICRA SME Update - November 2015