[India MSME Summit 2021] Why CCR and CMR are crucial in accessing formal credit
The COVID-19 pandemic highlighted several challenges faced by Indian MSMEs, including lack of technology adoption, their ability to spend, and more importantly, roadblocks to availing seamless access to credit.
While India’s micro, small, and medium enterprise sector contributes 30 percent to the country’s GDP, is integral to employment, industrial output, and in making India self-reliant or ‘aatmanirbhar’, it came to a screeching halt amid the pandemic and the subsequent lockdowns.
In fact, before the outbreak of COVID-19, reports suggested that MSMEs would go on to contribute up to 50 percent to the GDP.
“MSMEs will play a crucial role in the government’s plan for economic survival and in line with this, there have been numerous initiatives taken by the government to help the sector bounce back to the road of recovery. MSMEs faced numerous challenges — work from home, access to technology, ability to spend, and more,” said Harshala Chandorkar, Chief Operating Officer, TransUnion CIBIL.
In a keynote session at YourStory’s third annual India MSME Summit 2021, Harshala talked about access to commercial credit and the importance of Company Credit Report (CCR) and CIBIL MSME Rank (CMR).
“Credit has always been a key enabler in helping MSME entrepreneurs realise their dream, business goals, expansion plans. In fact, access to credit and liquidity is very very crucial at every point for an MSME’s business roadmap,” she said.
Availing credit from formal sectors, therefore, becomes more important. According to Harshala, more and more MSMEs get folded into the formal lending system, which uses data and analytics to make informed decisions.
CIBIL reports play an important role in this. Banks look for a good CIBIL and credit report while dispensing loans and MSMEs themselves need to study their CIBIL and credit reports before approaching a bank. In fact, a good CIBIL MSME Rank (CMR), she said, can help the MSME get a better interest rate.
To do this, all you have to do is visit Transunion CIBIL’s website, and check if your report has any discrepancy, and get it corrected immediately.
Staying on top of this, with the latest and accurate information will help an MSME be loan-ready as and when they need it.
“CIBIL report is simply a reputation collateral that gives banks confidence to lend an MSME and an enterprise should ensure to moderate and keep a check on its CIBIL report,” Harshala added.
“The ECLGS scheme, which provided 100 percent guarantee by NCGTC to the member lending institutions, was one of the big boosters to MSMEs, enabling them to meet their operational liabilities. Banks took that challenge, and we provided solutions to banks that helped them in finding the good MSMEs for funding,” explained Harshala.
According to her, MSMEs across the country need to focus on tech adoption, emphasising technology-led solutions that can help them be an active participant in the DIgital India movement.
This, in turn, will help MSMEs gain access to online platforms, which can further bridge the gap between them and consumers. Additionally, pitching products under the ‘Make in India’ umbrella will help them grow.