The Hindu : Business : SIDBI joins hands with Crisil to rate SSIs

Online edition of India's National Newspaper
Wednesday, Feb 16, 2005

Business

Business

SIDBI joins hands with Crisil to rate SSIs

By M. Gunasekaran

TIRUPUR, FEB. 15. The Small Industries Development Bank of India (SIDBI) has joined hands with Credit Rating Information Services India Ltd. (Crisil) along with other banks to start a company to rate small industries, said, N. Balasubramanian, Chairman and Managing Director, SIDBI.

The company will commence its services from May onwards.

"At present credit rating is being done for major companies and commercial banks. Rating will help bankers to extend loans in a speedy manner to SSIs and entrepreneurs with good track record also get benefited with lower interest rates," Mr. N. Balasubramanian told The Hindu.

The SIDBI, according to him, was not a mere financier/banker but a bank plus. And it had a duty to give all the assistance to the small industries and the bankers.

"There is a perception among bankers that SSI is a risky sector where the NPA is slightly higher. We want to change that," he felt. As a first major step, the SIDBI along with Bank of Baroda, Panjab National Bank, Bank of India, Union Bank of India, Oriental Bank of Commerce and Canara Bank has started a new company by joining with the nationally acclaimed rating institution, Crisil, he said. The rating company, yet to be named, would initially start on cluster basis. Infrastructure of the particular unit, resources and debts, repaying capacity, market performance, and international scenario would be taken into account while rating a company.

"Rating is an essential thing for every company. This would help them in many ways. By acquiring reputation in the rating their credibility will go up in the market. The banker would sanction them loan with confidence. And all the more SSIs would come to know their inherent strengths and weaknesses," Mr. Balasubramanian added.

He said the Union Government was considering the long pending demand of the SSI sector that enhancing the risk fund to Rs. 50 lakhs from the present level of Rs. 25 lakhs under the credit guarantee trust fund scheme. The banks could avail the risk rate funding if the barrower failed to repay the loan, which was sanctioned without any collateral security. A Rs. 480 fund was being raised for this purpose with the 80 per cent contribution from the Centre. Because of the changed scenario in the banking sector, the bank had changed its priorities form refinancing to direct lending. Rs. 1,500 crores was the target for direct lending for this fiscal, he added.

According to him, the bank was also thinking to create a knowledge hub on knitwear sector here to help other bankers. "I want to identify one or two textiles engineers with sound back round and depute them for at least six months to study the industry extensively. They should become the central information centre to all other bankers and the industry," he said.

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