What are the basic objectives of Performance and Credit Rating Scheme for Micro & Small Enterprises (MSME)? Discuss its potential impacts on MSME sector. (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 6 years
KEY POINTS
Objectives
· The main objective of the scheme is to provide a trusted third party opinion on the capabilities and creditworthiness of the Micro & Small Enterprises (MSEs) so as to create awareness amongst MSEs about the strengths and weakness of their existing operations.
· Aimed at enabling registered micro and small enterprises to obtain credit ratings.
· This is to provide them an opportunity to improve & enhance their organizational strengths and credit worthiness, so that they can access credit at cheaper rates and on easy terms.
· The scheme is also to facilitate them in increasing their acceptability from the Banks/Financial Institutions, Customers / Buyers and Vendors.
Potential impacts
· Rating is an independent, trusted third party opinion on capabilities and credit worthiness of MSEs.
· Rating enables MSE units to ascertain the strengths and weaknesses of their existing operations and take corrective measures to enhance their organizational strength.
· Good rating enables MSEs to access to funds at cheaper rates and better terms,
· Rating facilitates prompter credit decisions from Banks on proposals of MSEs.
· Good rating enhances the acceptability of the MSEs with their customers and buyers.
· Facilitate buyers in capability & capacity assessment of MSEs before finalizing purchase contracts.
