Credit rating is not a necessary requirement for any Micro and Small Enterprise (MSE) to get loan from Banks and Financial Institutions at economical rates. However, credit rating serves as a trusted third party opinion on the creditworthiness of the MSEs and a good rating helps the MSEs in obtaining faster and concessional credit from banks. The “Performance & Credit Rating Scheme” is being implemented by the Ministry of Micro, Small and Medium Enterprises (MSME) with the aim to encourage Micro & Small Enterprises (MSEs) to undertake credit and performance rating from a reputed and accredited independent rating agency.

Upto 31st March, 2010, a total of 19207 MSEs have been assigned rating under the Scheme and 1652 applications were under process with the seven empanelled rating agencies.

Rating by an independent rating agency provides deep insight into MSE’s operations. It reveals the credit- worthiness of the company in relation to its peers in the sector, and an assessment of its strength and weakness, based on its financial conditions and performance. Thus a good rating by an independent rating agency helps the Banks and Financial Institutions in assessing the strengths and credit worthiness of MSEs and facilitating credit to them on easier terms.

This information was given by the Minister of State (Independent Charge) for Micro, Small and Medium Enterprises (MSMEs) Shri Dinsha Patel in a written reply to a question in the Rajya Sabha today.

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