SMEs see interest cost decline post-rating: Survey

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Majority of small businesses with credit ratings have seen a reduction in their interest rate on bank loans, according a survey by a rating agency.

About 45 per cent of respondents of the survey carried out by rating agency Care said they have observed an interest rate reduction due to the credit rating.

An additional 6 percent of the 382 SMEs (small and medium enterprises) said they have benefitted by way of a new loan sanction at a concessional rate, the survey report said.

Some SMEs also experienced a drop in transaction cost due to getting rated, it added.

Apart from the cost benefits, some SMEs said rating lowered the processing time for a loan while some were also able to get a new term loan sanctioned, the report said.

The respondents included clients who have gotten themselves rated under the NSIC-Care performance and credit rating for micro and medium enterprises, where the rating agency has a tie-up with the National Small Industries Corporation.

The government subsidises up to 75 per cent of the fees paid to the rating agency under the product launched with help from the banks' umbrella body Indian Banks Association.

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