A credit rating is an opinion which estimates the credit worthiness of an individual, corporation or even a country. It is an evaluation made by credit rating agency of a borrower’s overall credit history. Credit rating is also known to evaluate the borrowers’ ability to repay debt & is arrived post assessment of his financial history and other subjective factors. Credit rating conveys the probability of the subjects’ ability to pay back a loan or obligation to the lender or the investor. However, in recent years, credit ratings have also been used to adjust insurance premiums, determine employment eligibility etc.

SMERA is the country’s only rating agency dedicated to the MSME sector in the country. SMERA derives its expertise from its promoters, namely: SIDBI (www.sidbi.in), Dun & Bradstreet (www.dnb.co.in) and  11 other share holder banks, both in the public and private sector; these share holder banks have significant experience in the MSME segment. SMERA has developed a pioneering & a customized rating model suiting the MSME sector that takes into consideration applicants’ financial as well as non-financial factors, nature of industry & the business environment. SMERA’s technical and equity partner, Dun & Bradstreet, has built the rating model for SMERA by using its proprietary database of 2,50,000 Indian MSME companies & its rich experience in the credit rating space of over 165 years. This is the most important factor that distinguishes SMERA Ratings from ratings of other agencies, who are largely into rating of equity issue/ papers/bonds etc of large corporate, banks etc.

All types of MSMEs involved in manufacturing, service or trading activities can approach SMERA, either directly or through bankers, for availing the Rating service.

MSME units interested in availing of SMERA’s Rating Services can visit SMERA website (www.smera.in) and forward their request to info@smera.in, post which, the unit will receive an application form and a checklist of documents to be submitted for availing of SMERA services. Alternatively, the unit can download the rating application form available on the website and forward the same with requisite fees and the required documents (as mentioned in the checklist of document) in duplicate to the nearest SMERA office.

MSME units can directly approach SMERA as suggested in point 5 or even banks can forward their request for rating of a MSME unit from SMERA; the choice is entirely left to the unit or its banker. However, in cases where MSME unit directly approaches SMERA, then, in such case, the rating certificate of such unit and the rating report is provided to the MSME unit. But in cases where the banker applies for rating of a MSME unit to SMERA, then, in such case, the rating certificate will be dispatched to the unit but the rating report will be mailed to the referring bank.

Leading banks have equity stake in SMERA with representation on Board of Directors. SMERA has also entered into MOUs with 29 banks and financial institutions with 11 banks and lending institutions providing commercial benefits to well rated SMERA units. In order to facilitate extension of monetary as well as non-monetary benefits to well rated SMERA units, member banks and SMERA have mapped their respective rating models to draw comfort from SMERA rating process and parameters. Based on SMERA Ratings the investment grade SMERA units have enjoyed preferential treatment from lenders; similarly, better rated units have also known to have enjoyed access to faster credit on better terms or enhancement of credit. Similarly, SMERA Ratings provide alternate opinion on the unit and additional comfort while lending. Further, SMERA Ratings can enhance MSME unit's market standing amongst its trading partners and potential customers, both in the domestic as well as international market.

The Rating is valid for a period of one year from the date of issue, subject to there being no significant changes/events occurring during that period which could materially affect the business and financial parameters of the organization/project. Hence it is recommended that units renew their ratings on yearly basis.

The TAT is 15 working days from the date of submission of complete information.

No, the Ratings so assigned will be reviewed by SMERA only on the request of the MSME unit or the referring bank. The Ratings are not automatically reviewed or monitored.

Yes, all accepted Ratings will be displayed on SMERA's website.

Almost all the banks accept SMERA Ratings and this is facilitated by MOUs that SMERA has entered into with these banks.

No, SMERA Rating will not replace the internal ratings of the lending institution.

MSME units, by and large, have to incur higher interest rate obligation as compared to large / medium corporate entities. Lending institutions arrive at a representative interest rate based on its internal ratings and many MSME borrowers are un-aware of their internal ratings & if aware, they are ignorant of the basis of arriving at such ratings. An external rating from SMERA would make the MSME borrower aware of his rating and the basis of arriving at rating from an external perspective, thus providing him with a competitive advantage. This awareness could also enable the MSMEs to improve its internal rating and endeavor to enjoy better terms from the lender fraternity.

Yes, SMERA Rating Report will enable the MSME unit in understanding its strength & risk factors & this will enable the MSME unit in self improvement.