Page 37 - Banking Finance September 2019

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 credit

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

overdue.
Navnit Kumar
Senior Manager(Faculty) b) CMR-4 to CMR-7-Are delinquent but never an NPA
Union Bank Of India c) CMR-8 to CMR-10-are known to be NPA at some point
STC Gurugram in time in the past 24 months.

BANKING FINANCE | SEPTEMBER | 2019 | 37