- Financial Express
How MSMEs can improve their credit risk scores
Credit and Finance for MSMEs: SME credit risk assessment models typically rely on the 3 Cs approach—capital, character, and capacity.
Credit and Finance for MSMEs: Small and Medium Enterprises (SMEs), the backbone of the Indian economy are hemmed in between the large corporate and retail segments in terms of loan ticket size and have the least credit penetration.
This is because non-incorporated SMEs are subject to relatively relaxed financial disclosure norms to avoid burdening them with too much compliance.
This results in inadequate and unreliable information about SMEs that makes it difficult to assess their creditworthiness.
This, along with the inability of traditional models to assess their credit risk, hinders credit penetration to SMEs.