MSME credit rating scheme to be reviewed by RBI

The Reserve Bank of India has directed the Indian Banks’ Association (IBA) to review the credit rating scheme for the micro, small and medium enterprises (MSMEs). The credit rating scheme has been often accused of being the reason behind slower credit off-take to the sector. Federation of Indian Micro and Small and Medium Enterprises (FISME) had recently urged the PM to intervene and do away with third-party ratings. RBI was forced to take initial steps in this regard after India’s largest public lender State Bank of India (SBI) raised objections to parameters being used by credit rating agencies for rating of MSME loans.