A Study on Implementation of Credit Rating Model for SMEs with reference to Business Toys Private Limited.

Abstract

What contributes to the strong backbone of Indian economy is the MSME sector. Around 63.7% of the jobs created by companies belonging to manufacturing and service SMEs say the industry research report published by SMERA (small and medium enterprise rating) one of India’s top credit rating agency. MSMEs are present and clustered across India and has played a very crucial role post Industrial revolution. Roughly it contributes to 56% of the India’s manufacturing GDP. Now a day’s SMEs are making a new buzz in India’s contribution to the exports and thus improving the exchange rate stability. Government has been increasingly supporting the growth of SMEs as they are the future growth enablers for Indian Economy. Recent meltdown in India’s Banking system has impacted the economy to its core. The rising tension of NPAs in public sector banks is a huge worry to Government, Banks as well as central bank. Its agreed point the majority of the chunk of NPAs has come from major large-cap players, but SMEs also have their contribution to rising NPAs. The report by RBI says the improper lending practices to stressed SMEs has also caused major harm to the Banking System. Although majority of the default cases arise due to sectoral downtrends which SMEs cannot withstand, but as a top standard policy it has increasingly become important for Banks as well as SMEs to assess their financial as well as business performance.