MSMEs with good CIBIL MSME Rank (CMR) can avail loans at lower interest rate: Bank of Baroda
New Delhi, Sept 6 (KNN) Taking a major step forward in the direction of risk based pricing of Micro Small and Medium Enterprises (MSME) loans, Bank of Baroda has announced an offering of lower interest rates on such loans to MSMEs who have good CIBIL MSME Rank (CMR).
To predict the probability of an MSME becoming NPA in the next 12 months, CMR uses machine learning algorithms and provides rank to MSME based on its credit history data on a scale of 1 to 10.
CMR-1 is considered as the best possible rank for the least risky MSMEs while CMR-10 is considered as the riskiest rank for MSMEs.
The better the CMR, the lower the risk of NPA associated with the MSME and it is applicable to MSMEs with aggregate commercial borrowings between Rs 10 Lakhs to Rs 10 Crores.
By adopting risk-based pricing of MSME loans based on CMR, Bank of Baroda will now be able to make access to credit cheaper for well performing MSMEs in the country.
Speaking about this move, Executive Director, Bank of Baroda, Papia Sengupta said that Bank of Baroda is credited with pioneering innovation and technology to drive business growth and credit penetration.
He said, “We were amongst the first banks in India to offer risk-based pricing on home loans based on CIBIL Score and now we are the pioneers in offering risk-based pricing on MSME loans based on CIBIL MSME Rank.”
Based on this policy, MSMEs with lower CMR can expect loan starting at ROI of 1 year MCLR +0.05% from Bank of Baroda. CMR based pricing will help us manage risks better and also enable greater credit opportunities for deserving MSMEs, he added.