With the intent of deepening credit flow to small businesses and also helping lenders avoid loan losses on such bets, credit information company TransUnion Cibil launched a ranking system for MSME borrowers. The ‘FIT Rank’ launched by TransUnion Cibil in association with Online PSB Loans, will rate the over 6 crore micro, small and medium enterprises (MSMEs) by drawing inputs from their current accounts, income tax returns and also Goods and Service Tax (GST) returns to arrive at a score between 1-10 to rate a borrower after taking consent to draw the relevant data.
Significance Of This Ranking:
- The ranking will give lenders an idea about the capacity of an enterprise to pay, its creditworthiness and also intention to pay from past experience.
- The product will go into the cash flows of an entity while arriving at the rank, and hence broaden the universe of entities who can borrow because at present, banks insist on collaterals.
- The lenders will be able to get the probability of default in a particular case because the engines have sifted through the data of many years while arriving at the rank.
- It will also help lenders monitor outstanding credit by timely flagging any aspects of concern.
- It will also help a MSME to go to the market and ask for the best rates because of the ranking.
The chairman and managing director of Sidbi: Sivasubramanian Ramann.