RATING CRITERIA FOR MICRO, SMALL AND MEDIUM ENTERPRISES- A STUDY

ABSTRACT

The Micro, Small and Medium Enterprises sector plays an important role in any developing economy. Micro, Small and Medium Enterprises faces the many opportunities and challenges in India. The present article deals with micro, small and medium enterprises and there credit rating. MSMEs are credited with generating high rates of employment growth and account for a major share of industrial production and exports. Credit risk assessment in this segment requires a specific approach, because the factors affecting the creditworthiness are somewhat different compared to the large corporate entities. Hence, to further support the growth for this sector and help the investors to determine the relative creditworthiness of entities belonging to this segment, a need for separate rating product was felt. Credit ratings assess the financial viability of the MSMEs and its capability to honor business obligations. Rating highlights the overall health of the enterprise and benchmarks its performance within the industry for an effective peer review.It is expected that rating would encourage MSMEs sector in improving its contribution by way of increasing their productivity.

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