Financial Daily from THE HINDU group of publications
Tuesday, Sep 06, 2005
Industry & Economy - SSI
SME rating agency launched 'Centre will ensure higher credit flow to SSI units'
ALL SMILES: The Union Finance Minister, Mr P. Chidambaram, handing over a rating certificate to an entrepreneur at the launch of SME Rating Agency of India Ltd in Coimbatore on Monday. K. Ananthan
Coimbatore , Sept. 5
THE Union Finance Minister, Mr P. Chidambaram, today launched SME Rating Agency of India (SMERA), a dedicated rating agency for small and medium enterprises, and expressed the hope that it would enhance credit flow to small and tiny sectors.
Mr Chidambaram said that eight banks, including those in the private sector, have figured in SMERA, adding that more banks would soon join it to give depth to operations.
Unlike large industries that can command attention from the banks on the strength of their balance sheets and the wherewithal in getting the project reports through, the lack of information on SMEs has hampered credit flow to the sector; moreover, there is no separate credit rating agency for these industries.
This is why the Centre decided to start SMERA, a joint initiative of SIDBI, Dun and Bradstreet, Credit Information Bureau (India) Ltd, and some banks.
He said that it was part of a multi-pronged approach to boost the SSI sector and would bring greater access to credit, lower interest rate, and lower collateral requirements.
As a facilitation factor, the Government under the National Small Industries Corporation scheme would absorb 75 per cent of the credit rating fee payable by SSI units seeking from SMERA.
Mr Chidambaram said that the UPA Government has set a target of doubling the credit to SSIs over the next five years. In the current fiscal, SSI credit disbursal would increase by Rs 13,000 crore from the 2004-05 levels of Rs 67,600 crore.
The Centre would also monitor the SSI credit portfolio to ensure that the banks keep up the desired credit increase rate. The number of registered SSIs in the country between 1999-2000 and 2004-05 went up from 12.32 lakh to 14.38 lakh, and that of unregistered ones from 84.83 lakh to 1.22 crore. Their production value rose from Rs 2.34 lakh crore to Rs 4.67 lakh crore.
Speaking on the occasion, Mr N. Balasubramanian, Chairman and Managing Director of SIDBI, said that with SMERA coming into being, better rating of SSIs was possible; as the rating becomes popular, bank rates would get competitive for small enterprises.
The rate in the 7.5-9 per cent band for SSIs is possible within the next few months, he added.
Mr Anupan Das Gupta, Secretary, Ministry of SSI, said that the lack of financial practice added to the woes in funding the tiny sector.
SMERA can also develop a package for micro industries and other informal sectors of the industry.
The President of the Coimbatore-based South India Engineering Manufacturers Association (SIEMA), Mr C.R. Swaminathan, was aggrieved over the delay in notifying the enhanced quantum of the capital subsidy provided under the credit-linked capital subsidy programme for SSIs.
Mr Gupta said that the same would be notified soon, and the subsidy would increase from Rs 40 lakh to Rs 1 crore.
The SSI capital subsidy programme would be made co-terminus with the 10th Plan programme by giving further extension.
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