Recent years have seen rapid growth in the Small and Medium Enterprises (SME) sector, and an enhanced appreciation of this sector's critical role in driving economic growth. However, authentic and independent credit research in this sector has so far been minimal. With many private and public sector banks directing resources and focus towards SME lending, the need has arisen for independent credit opinions. CRISIL offers its rating services to SMEs to meet this need. SME ratings are offered on an exclusive rating scale, distinct from regular ratings offered to large corporations, banks and government entities.
Credit evaluation in the SME sector needs a specialised approach, as the issues and drivers of credit quality are different from those applicable for large companies. The weightages assigned to various parameters of evaluation therefore need to be different. There has to be a good understanding of the particular cluster or area where the SME is operating.
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For example, a company with high Performance Capability and high Financial Strength will be rated 'SE2A', while one with weak Performance Capability and low Financial Strength will be rated 'SE4C'.