Page 39 - Banking Finance September 2019

ARTICLE

Present CMR distribution of MSME Portfolio

If we will see the data of MSME in Non-Npa Portfolio 39% 2. Generation of CIBIL report is an integral part of due
companies lies in CMR 1, 2 & 3 category where the scope diligence process and CMR will be an additional
of finance in already available while in CMR 4 & 5 percentage parameter in that report itself, However, generation of
is 33% & others are in CMR 6, 7, 8 & 9 category. that report ranks needs to be opted while generating
the CIBIL Commercial credit report. Every CMR grade
We may see there is a huge opportunity not only for lending
has a validated pd estimate associated with it which can
but also customer can be guided to improve their rating by
help bank to offer risk based pricing to MSME units.
maintaining Financial discipline as well as to they must
aware about the technical reasons for lower ratings. It will 3. CMRs can facilitate continuous and timely surveillance
help Banks as well as customer to minimise the risk and get of MSMEs which is otherwise difficult for lenders
better pricing. There are already 69% MSME borrower they 4. Renewal of existing accounts, these CMRs can act as a
can have easy access to credit. monitoring tool to judge their financial performance.

With the help of CMR Rating it is a game changer in doing
the due diligence as it was very difficult to do this because ''CIBIL MSME Rank will be very helpful tool for credit decision
it is largely very unorganised sector. as collection of information is very difficult for MSME sector
which is largely unorganised. This will help Banks in
Source: report-msme-pulse-June-2018
acquisition of new MSME customers as well as to reduce
turnaround time in disposal of proposal. It will also provide
Benefits of CIBIL CMR greater credit opportunities for deserving small businesses
1. The new product is statistically built behavioural finally CIBIL MSME rank will help lenders to take quality
scorecard for MSMEs to predict default in next 12 credit decisions, improve Turnaround time, Control NPA and
months. CMRs are compliant with Basel norms and will provide access to faster and cheaper credit.''
help in overcoming some of the key challenges in MSME
lending like delayed submission/Quality of financial Disclaimer: Information from various publics sources have
statements, subjectivity of credit decisions etc. been utilized for writing this article. T

BANKING FINANCE | SEPTEMBER | 2019 | 39