Bank of Baroda partners CARE Ratings to assess credit quality of SMEs
The rating agency will evaluate the credit quality of existing and prospective SME customers of the bank.
"Our tie-up with Care Ratings will strengthen the evaluation process and enable growth of the SME lending business," Bank of Baroda Executive Director Vikramaditya Singh Khichi said.
The biggest challenge for SMEs has been the availability of finance, Care Ratings Executive Director Mehul Pandya said.
"If they don't receive financial support from banks, they typically tend to fall back on either the promoter's own savings or borrowings from family and friends. We hope that this partnership will help identify businesses that will aid the country's growth story of tomorrow," he said.
Care Ratings will assess the SMEs by processing and analyzing structured, unstructured and new data streams.
It will also indicate the relative creditworthiness of SMEs based on an eight-point scale, where 1 indicates the highest creditworthiness and 8 - poor creditworthiness.
"Increased digitalisation of the economy, the availability of new data sources such as the GST, in addition to traditional financial data and non-traditional data sources, allow for new approach for grading of SMEs. This MoU with Bank of Baroda is a step in this direction," Pandya added. HV RUJ