New Delhi: The government plans to create a system of financial ratings for micro, small and medium enterprises. MSME Minister Nitin Gadkari said on Monday that this will make it easier for banks to decide on lending to such borrowers.
Gadkari said at the launch of Maharashtra Division of Indian Bank’s MSME Mentoring Program, “Many MSMEs are doing well and we can put in place a system of financial ratings for them. Banks will have to suggest such a system.”
He said that this system can be made on the basis of annual turnover of MSMEs, Goods and Services Tax (GST) records, income tax records and exports. In this, profitability and balance sheet quality will also be important.
Gadkari said that shipping and biofuel provide good financing opportunities to banks. He said that there is a lot of potential for ethanol production in Maharashtra, Karnataka, Tamil Nadu and Uttar Pradesh.
As of April, the loans of banks to micro and small industries stood at about Rs 3.72 lakh crore. It has increased by 3.8 percent as compared to the previous year.
The government has also started some schemes like Emergency Credit Guarantee Scheme to make it easier for MSMEs to get loans.
