Page 44 - Banking Finance July 2020

ARTICLE

CIBIL MSME

RANK - AN

ADDITIONAL

DUE DILIGENCE

TOOL

C IBIL MSME Rank is a tool to Access the Credit Risk The Key Parameters used in CMR to measure

ranking of Micro, Small and Medium Enterprises
credit risk are:
to make informed lending decisions, CMR is a
1. Liquidity-the liquidity profile of borrower is adjudged by
credit risk for MSMEs that predicts the probability
looking at the seasonally adjusted patterns of funds
of an MSME becoming NPA in the next 12 months. It helps
utilization over the past 24 month's period.
us to understand the credit behaviour of MSME as well as
the probability of default based on the rank. It is applicable 2. Firmographics-descriptive attributes like the maturity
to MSMEs with aggregate commercial borrowing between of the entity, ownership type, industry, location.
Rs 10 lakhs to Rs 10 Crores.CMR provides a rank to the 3. Repayment Behaviour-month on month analysis of
MSME based on its credit history data on a scale of 1 to payments made along with the assets classification, are
10.CMR 1 being the best possible rank for the least risky considered to determine if the borrower has a poor or
MSMEs and CMR 10 being the riskiest rank for MSMEs.The a good track record.
lower the CMR, the lower the Risk of NPA associated with
the MSME. The Model categorises the Entity into broadly
three categories:
About the author a) CMR-1 to CMR-3-Never delinquent or No Amount
overdue.
Navnit Kumar
b) CMR-4 to CMR-7-Are delinquent but never an NPA
Senior Manager (Faculty)
Staff Training Centre, c) CMR-8 to CMR-10-are known to be NPA at some point
Gurugram in time in the past 24 months.

44 | 2020 | JULY | BANKING FINANCE