MSME::
SMALL AND MEDIUM ENTERPRISES RATING AGENCY (SMERA)
SME Rating Agency of India Ltd (SMERA) is a third party rating agency exclusively set up
for micro, smal l, and medium enterprises in India for ratings on credit worthiness.
SMERA is promoted by SIDBI and Dun & Bradstreet along with various government,
public and private sector banks. It provides ratings which enable MSME units to raise
bank loans at competitive rates of interest. SMERA's ratings are an independent thirdparty
assessment of the overall status of the MSMEs as performing entities. The ratings
comprise a composite appraisal indicator and a size indicator. Its ratings enhance the
market standing of the MSMEs among their trading partners and customers. In addition,
the agency factors in industry dynamics in its ratings through a system of comparison of
strengths and weaknesses of the MSME with other companies in the same line of
business. It is also risk profiling the clusters through special studies and these would fill
the information gap between the lender and the sector. Banks offer concessions in pricing
(0.25%-0.50%) for credit to MSMEs rated by SMERA.
Other MSME Rating Agencies approved by RBI are ICRA, CARE, India Ratings & Research Pvt.
Ltd. (India Rating) & CRISIL, who are rating the units on various parameters which are
acceptable to the financial institutions/Banks and in the marketability of the products. RBI has
granted accreditation to SMERA as an External Credit Assessment Institution (ECAI) in Sept.
2012 and accordingly banks have been permitted by RBI to use the ratings of SMERA for the
purpose of risk weighting their claims for capital adequacy purposes in addition to the existing
five domestic credit rating agencies, It has paved way for SMERA to rate/grade various
instruments such as: IPO, Bonds, Security Receipts, Bank Loan Instruments etc.
SMEs because of their diversity, spread both in form and content, have an inherent need for
support both from the Government and non-government organizations as well as financing
institutions. This chapter narrates the role and functions of these organizations. Many of the
functions they perform have evolved over a period of time and they are mostly demand-driven
although some government organizations continue to remain supply-driven, MSME DO is the
fountainhead of the service organizations in the government fold. Some of them underwent
structural changes in tune with the emerging needs of the sector like NIMSME, NIESBUD,
NSIC etc. Some like the SFCs that suffered due to inefficient functioning building up huge
NPAs, shifting their span of control from IDBI to SIDBI are also changing
SMALL AND MEDIUM ENTERPRISES RATING AGENCY (SMERA)
SME Rating Agency of India Ltd (SMERA) is a third party rating agency exclusively set up
for micro, smal l, and medium enterprises in India for ratings on credit worthiness.
SMERA is promoted by SIDBI and Dun & Bradstreet along with various government,
public and private sector banks. It provides ratings which enable MSME units to raise
bank loans at competitive rates of interest. SMERA's ratings are an independent thirdparty
assessment of the overall status of the MSMEs as performing entities. The ratings
comprise a composite appraisal indicator and a size indicator. Its ratings enhance the
market standing of the MSMEs among their trading partners and customers. In addition,
the agency factors in industry dynamics in its ratings through a system of comparison of
strengths and weaknesses of the MSME with other companies in the same line of
business. It is also risk profiling the clusters through special studies and these would fill
the information gap between the lender and the sector. Banks offer concessions in pricing
(0.25%-0.50%) for credit to MSMEs rated by SMERA.
Other MSME Rating Agencies approved by RBI are ICRA, CARE, India Ratings & Research Pvt.
Ltd. (India Rating) & CRISIL, who are rating the units on various parameters which are
acceptable to the financial institutions/Banks and in the marketability of the products. RBI has
granted accreditation to SMERA as an External Credit Assessment Institution (ECAI) in Sept.
2012 and accordingly banks have been permitted by RBI to use the ratings of SMERA for the
purpose of risk weighting their claims for capital adequacy purposes in addition to the existing
five domestic credit rating agencies, It has paved way for SMERA to rate/grade various
instruments such as: IPO, Bonds, Security Receipts, Bank Loan Instruments etc.
SMEs because of their diversity, spread both in form and content, have an inherent need for
support both from the Government and non-government organizations as well as financing
institutions. This chapter narrates the role and functions of these organizations. Many of the
functions they perform have evolved over a period of time and they are mostly demand-driven
although some government organizations continue to remain supply-driven, MSME DO is the
fountainhead of the service organizations in the government fold. Some of them underwent
structural changes in tune with the emerging needs of the sector like NIMSME, NIESBUD,
NSIC etc. Some like the SFCs that suffered due to inefficient functioning building up huge
NPAs, shifting their span of control from IDBI to SIDBI are also changing
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