Rating agencies help sector get loans fast

The trend of getting rated by professional credit rating agencies is fast catching up with the SMEs in the country. The sector is resorting to such methods in order to prove itself as a reliable borrower to the banks for getting loans.

While it is not mandatory for an SME to get itself rated by a credit rating agency, the move helps it to get its loan applications processed by the banks in lesser time.

However, the norm of hiring credit rating agencies is becoming popular with banks too. According to a RBI guideline, the banks are required to get their customers rated if they want to get capital relief under Basel-II norms.

Many Indian banks like Canara Bank, Karnataka Bank and Syndicate Bank have entered into understanding with credit rating agencies like ICRA, CARE, CRISIL for rating of SMEs. Now Syndicate Bank has also signed up with Fitch to utilise its services.

According to the agreement, small and medium enterprises will get affordable, transparent, comprehensive and reliable rating services that will enhance credit acceptance and other services.

It will also help SMEs make use of independent and objective opinion offered by rating agency for evaluating infrastructure, corporate and other loan exposures of Syndicate Bank.

Fitch will be extending concession in fee payable for cases referred by the bank. The bank will have the comfort of an independent assessment of the client rating while taking credit decision.

"The SMEs would get concession in interest rates and service charges offered by the bank," a senior executive of Syndicate Bank said.