Credit rating for MSMEs on anvil; govt seeks ideas for setting up this new system

By: |
Published: May 12, 2020 7:20 PM

Credit and Finance for MSMEs: MSME Minister Nitin Gadkari has sought ideas from the industry and small business associations for setting up a system for rating of MSMEs.

Nitin Gadkari urged MSMEs to focus on export enhancement and adopting necessary practices to reduce costs to become competitive in the global market. (File pic)

Credit and Finance for MSMEs: MSME Minister Nitin Gadkari has sought ideas from the industry and small business associations for setting up a system for rating of MSMEs. The minister in a video conference on Tuesday with the members of the Chamber of Indian Micro, Small and Medium Enterprises and the Institute of Cost Accountants of India requested support for “an IT-based analysis system for rating of MSMEs to bring transparency and have result-oriented and time-bound processes.” This comes more than five months after the minister had announced that the government is in the process of launching ‘Digital data based credit ratings’ of MSMEs to enable them to get bank loans on the basis of the ratings.

Timely payment of taxes and loans will ensure good credit ratings and the concerned MSME will get digital data-based credit ratings, PTI cited the minister as saying in November last year. The government is also looking to buy 15 per cent of the amount raised by MSMEs from public markets as equity stakes. The equity support will be for MSMEs with AAA credit rating.

Also read: MSMEs may now get their grievances resolved within 7 days through this new govt portal

The minister urged MSMEs to focus on export enhancement and adopting necessary practices to reduce power cost, logistics cost and production cost to become competitive in the global market, according to a statement by the MSME Ministry.

Highlighting the issues and suggestions from the MSME sector, representatives in the meeting sought setting up of a special tribunal for MSME cases, stopping SARFAESI Act for a year, plan to ensure adequate financing option and mechanism to track efficient utilization, provision for MSMEs considering the threat of cheap import, the release of delayed payments, restructuring of NPA accounts, removing the requirement of external credit rating and CIBIL score for bank loan etc.

Meanwhile, the government has been looking at more than 300 per cent jump in the restructuring of MSME loan accounts to 25 lakh MSME loan accounts by December from 6 lakh till March 31, Gadkari had told members of the Indore Management Association in a webinar last week. The Reserve Bank of India had announced, in February this year, extending the debt restructuring scheme window to December 31, 2020, without an asset classification downgrade to MSMEs that were in default as on January 1, 2020.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1TikTok loses, ‘desi’ Mitron wins as India declares war against Chinese apps
2Modi govt’s MSME credit scheme jumps over 1300% in disbursement; supported this many Covid-hit firms
3PE-VC capital piles up due to fewer deals by investors amid Covid; fundraising to stay muted this year