Govt seeks views on Performance in Credit Rating Scheme

Government today sought comments from stakeholders on the recommendations of the Committee set up by MSME Ministry for revision in the guidelines of Performance in Credit Rating Scheme.
Performance and Credit Rating Scheme (PCRS) is being implemented by Ministry of MSME through National Small Industries Corporation (NSIC).
Under this scheme, grant up to 75 per cent of the fee payable to a rating agency by Micro and Small Enterprises up to a defined ceiling is provided by Ministry of MSME to the rating agencies.
The panel in its draft recommendations has proposed a revised fee structure under which the fee to be paid to the rating agencies shall be based on the turnover of the Small-Scale Units which has been categorized into three slabs.

For turnover of up to Rs 50 lakh, the fee to be reimbursed by Ministry will be 75 per cent of the fee charged by the rating agency subject to a ceiling of Rs 10,000. Under the second slab of above Rs 50 lakh to Rs 2 crore, the fee to be reimbursed will be subject to a ceiling of Rs 35,000, whereas for the third slab above Rs 2 crore, the fee will be reimbursed subject to a ceiling of Rs 40,000.
"Various stake holders including banks, micro and small enterprises, industry associations and rating agencies are requested to examine the draft recommendations of the Committee for amendment in guidelines of the PCR Scheme and provide their comments to Ministry of MSME by April 5," micro, small and medium enterprises (MSME) Ministry stated.

Besides, the panel has proposed that the rating scale under the Scheme be revised to align it to the scale normally used by bankers. This will help banks and financial institutions to assess the credit worthiness of the MSEs applying to banks for fresh loans or for enhancement of their existing limits.

The scale besides indicating the credit worthiness would also indicate to the user the financial strength and operating performance through performance through a well defined matrix.
Besides, Credit Rating Agencies (CRAs) should provide data for the first year and there after should endevour to track the units rated by them at least for three years including the financial year for which the rating is being conducted.

A portal should be developed wherein information with regard to all rated units should be uploaded by the respective rating agencies.
While rating agencies would have access to this portal for uploading the information with respect to the units rated by them, Ministry of MSME and NSIC would have access to view the information on the portal.
The guidelines under the scheme issued in the year 2004. Therefore, the Ministry of MSME has decided to review the guidelines of the PCR Scheme to make it more useful for lenders and Micro & Small Enterprises and increase its effectiveness.