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Benefits for SMEs Who Get Themselves Rated by Third Party like CRISIL

Companies like CRISIL rate more than 2500 SMEs every year on the basis of NSIC (National Small Industries Corporation) Scheme. The rating is valid for just one year and the companies have their own in-house centralized dedicated team for it. The rating shows that there has been an increase in interest rate for SMEs. However, the SMEs who get themselves rated by third parties like CRISIL have several advantages, some of which are listed below:

Concession in Interest Rate

The ratings make dedicated SME banks comfortable when dealing with SMEs. As a result, frequent transactions take place, leading to a reduction in interest rates. It is common for banks to give a faster and concessional credit to SMEs if they have a good rating. Banks offer a concession in interest rate to SMEs between 0.25-1.25 percent. Banks are willing to provide concession in interest rate because the SME business bank account can price the product according to the risk associated with it.

Increase in Credit Limit

One of the most important benefits is that bankers are willing to increase the credit limit for business banking of SMEs after the ratings. It has a compounding effect on the turnover. For instance, a good rating can help SMEs increase the bank guarantee by almost double the initial amount. This in turn, helps in increasing the overall turnover.

Expand the Market Base

According to the survey, around 450 cities are hubs for emerging and growing SMEs in India. The rating gives them an opportunity to expand their market base and get new contracts from export markets. The coordination with markets also improves for SMEs with higher ratings. The SMEs are able to attract new customers and even apply for government tenders by attaching the credit rating information.

Credit rating helps in capital provisioning requirement, interest concession, higher credit limit, and increasing market base to the SMEs. So, undergoing a credit and performance rating from an independent and reputed rating agency is highly beneficial for SMEs.


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