CRISIL SME Tracker: There is more to creditworthiness than size of an MSE

Information asymmetry and absence of credit trails have long been stumbling blocks in efforts to foster inclusion of micro and small enterprises (MSEs) in the formal lending system. 

Compounding the problem is low adoption of credit assessment in the sector, due to lack of awareness or inhibitions of promoters. A major factor keeping the enterprises from getting assessed appears to be a belief that creditworthiness is determined by size, as reflected in income or net worth. 

A CRISIL study of 3,570 MSEs, however, indicates that creditworthiness is not a function of absolutes, but of relative size and performance. Nearly one in four