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Despite the fact that Small and Medium Enterprises (SMEs) are the main contributors to the country's economic growth, they still face difficulties in doing smooth business. With banks and financial institutions not forthcoming in lending, Indian SMEs are unable to expand and focus on research and development which can enhance their production.
Unlike large industries that can command attention from the banks on the strength of their balance sheets and the competence in getting the project reports through, the lack of information on SMEs has hampered credit flow to the sector.
I think SMEs can benefit from the ratings given by SME Rating Agency of India Limited (SMERA), which is a joint initiative by SIDBI, Dun & Bradstreet Information Services India Private Limited (D&B), Credit Information Bureau (India) Limited (CIBIL) and several leading banks in the country. SMERA is the country's first rating agency that focuses primarily on the Indian SME segment. SMERA's primary objective is to facilitate greater and easier flow of credit from the banking sector to SMEs.
Also as a facilitation factor, the government under the National Small Industries Corporation scheme absorbs 75 percent of the credit rating fee payable by SSI units seeking from SMERA.
SMERA ratings take into account industry dynamics by factoring in a system through which a SME could compare its strengths and weaknesses with those of other companies in the same line of business. This is done through statistically derived industry benchmarks for various ratios.
Free Member, Joined :06/09/2007
No of Topics Posted : 112
Reply/Comments : 9
I think there are several benefits of getting SMERA rating:
Wide Recognition and Acceptance:
With each bank having separate rating processes and disclosure requirements for the purpose of disbursing loans, SMEs waste time, effort and money while approaching different banks for credit. As SMERA has adopted a comprehensive, transparent and reliable rating process, it would have a wider acceptance within the banking system of the country.
MOU with Banks:
SMERA has taken the initiative of entering into MOUs with 14 banks. Further a number of banks have announced favourable credit terms including reduction in interest rates to units rated by SMERA.
Favourable borrowing terms:
Better ratings from SMERA has already started benefiting units by way of more favourable credit terms in terms of interest rebates including Lower collateral requirements, reduced interest rates and simplified lending norms
Faster Access to Credit:
SMERA Ratings facilitate banks/lending institutions in reducing the turnaround time in processing credit applications, thereby providing SMEs access to timely and adequate credit.
Unique DUNS No:
Each unit availing of SMERA ratings is assigned a unique 9 digit number DUNS No. The number is a unique nine-digit identification sequence, which provides unique identifiers of single business entities, while used by the world's most influential standards-setting organizations, it is recognized, recommended and/or required by more than 50 global, industry and trade associations
SMERA rating adds credibility to the status of the SME unit and also helps to open doors to deal with large companies especially those who deal with a big number of vendors. The ratings serve as motivation to adopt good governance practices which are beneficial in the long run. The SMERA ratings also help in international trade and commerce and serve as first point to generate interest among potential trading partners and thus acts as an tool for self correction.& self improvement.
Free Member, Joined :02/02/2007
No of Topics Posted : 122
Reply/Comments : 16
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