A proposal to have differential credit rating scales for MSMEs and large companies under the Basel-II framework is being considered by the Reserve Bank of India (RBI) and the Union finance ministry. Under Basel-II norms, if any loan amount is more than Rs 5 crore, it needs to be rated by an external agency. The criteria for rating a large company, which could have better parameters, are the same as for MSMEs. Industry has asked for a change in this. It also wants that the MSME threshold for mandatory external credit rating be raised from the present Rs 5 crore to Rs 25 crore. "Many things which are applicable to a large corporate might not apply to a small company. This affects the ratings of small companies," said Mukesh Mohan Gupta, President, Chamber of Indian MSMEs (CIMSME). A study by CIMSME contends 90 per cent of banks are in favour of a different credit rating scale for MSMEs.
RBI is expected to discuss the issue with credit rating agencies and, as mentioned earlier, to include prompt payment to MSME suppliers as a positive parameter for rating large companies. Gupta said often a loan by an MSME becomes a non-performing asset because of delayed payment from large companies; in this manner, many of the latter use the working capital of small companies.