MSMEs will receive a third-party view on their credit rating as well as performance. Thus, by stating their strengths and weaknesses, MSMEs will understand their capabilities and creditworthiness. Further, the Credit Rating Agencies such as CRISIL, ICRA, Dun and Bradstreet (D&B), Brickworks, and ONICRA assists with a low cost. Additionally, NSIC is the nodal agency for this scheme.
Significance of the Credit Rating Scheme
In the present scenario, it is well aware that MSMEs play a crucial role in the Indian economy. Also, it is important to notify that India has experienced a steep growth in the MSME sector. Regardless of that, the challenges they face are plenty. Thus, resulting in the shutting down of several MSME units. Thereby, urging the government to find a remedy to rectify the same and prevent the closing down. Addressing that, the government initiated the Performance and Credit Rating scheme.
Government Aiding the Scheme
Recently, financial assistance is via the Zero defect Zero Effect certification policy that includes 50 parameters to strengthen the sector. Further, innumerable awareness programs, workshops, and training are conducted across the country. Additionally, the government has allotted Rs 3 trillion to this sector. As a result, the 60 trillion turnover contribution by the MSME sector covers 37.5% GDP of the country. Thereby, the result encourages further aid.
Salient Features of the Performance and Credit Rating Scheme
- Agencies enrolled under SEBI and enlisted as External Credit Assessment Institute by RBI can carry out the rating.
- Uniform Rating scale irrespective of the agencies.
- MSME can select the credit rating agency of their choice, also they will be held accountability.
- The fee will depend on the turnover of the unit.
Report of Credit Rating
The credit rating agency will investigate the establishment that involves a site visit and provide a credit rating. Accordingly, this report will cover the performance of the unit along with the creditworthiness of the establishment. Further, it would encompass the unit’s operations, finances, extent od business, and the risks in the management. Moreover, the overall report can involve three segments
- The rating scale ranges from highest to poor credit worth of the unit concerning other MSEs.
- Financial Strength Scale ranges from highest to poor.
- Operating Performance Scale also ranges highest to poor.
Choosing the Agency to Rate the Performance and Credit Rating
As stated earlier, any agencies approved by SEBI and RBI can be selected as the agency. Thereby, any MSME unit applying for rating must fill an application form for the credit rating. Following that, submit the same rating agency and upload it to MSME Data Bank.
Subsidy for the Credit Rating Fee
The credit rating agencies prescribe the fee depending on the turnover of the unit. Nonetheless, they notify the fee to NSIC for its approval. However, the government aids by providing subsidy as follows
- Over Rs 50 lakhs turnover: 75% up to Rs 15,000
- Between Rs 50 lakhs to Rs 200 lakhs turnover: 75% up to Rs 30,000
- Over Rs 200 lakhs turnover: 75% up to Rs 40,000
Note: Rest will be paid by the MSME unit
The application forms are easily attainable at NSIC head offices. Further, they are also available at the official websites of NSIC, IBA, and other rating agencies.
The units can easily fill the form and submit the same to NSIC or the Rating Agency. Additionally, extra information by clicking here.