Bank Credit To SMEs Falls To Below 8%

New Delhi, July 29: | Updated: Jul 30 2002, 05:30am hrs
Bank credit to small and medium scale enterprises (SMEs) has been falling in the past few years, with the total credit declining to below eight per cent in 2000 from 14 per cent in 1988.

“Bank credit to SMEs has been falling in percentage terms over the past years. While in 1988, credit to SMEs was almost 14 per cent of the total bank credit, the percentage came down to less than eight per cent in 2000,” Mr Vinay Joshi Manager (Business Development) of Crisil said at a CII seminar on Credit ratings on SMEs here.

The strength of SSI could not be judged purely on credit factors, Mr Joshi said, adding that Crisil had developed a new methodology for SSI credit rating. The new method was a combination of credit and performance factors and was based on 50 test cases across the industry.

Credit rating was important for SMEs in the era of globalisation and the ratings could help enterprises in having access to funds for technology upgradation and procuring order from MNCs and global markets, Mr Shankar Aggarwal, Joint Secretary, SSI & ARI said.

SMEs have been the major creators of employment in the country as they constitute 80 per cent of industry but the situation was gradually changing due to lack of availability of finance to the SMEs, resulting in downsizing of the industry and unemployment, he added.