RBI raises BLR rating threshold from Rs. 5 crore to 7.5 crore

New Delhi, Oct 9 (KNN) With enhancement of retail exposure limit from Rs. 5 crore to 7.5 crore, the Reserve bank of India has given greater flexibility to banks to extend loans to retail borrowers and MSMEs.

The move has been announced during release of monetary policy report (Oct 2020).

Now for the loan exposure up to Rs. 7.5 crore (both fund and non-fund based), the  banks would not require a Bank Loan Rating (BLR) from third party Credit Rating Agencies (CRAs).  

Reacting to the development Dr. Animesh Saxena, President of Federation of  Micro and Small & Medium Enterprises (FISME) said, “enhancing the retail exposure limit is the right step but what was needed was to extend this flexibility to entire MSME sector”.

According to FISME,  most SMEs have been subjected to BLR rating regime creating captive business for rating agencies. The CRAs just apply the corporate sector models on SMEs producing absurd results, poor rating and higher interest rates for SMEs. Even the best of MSMEs, FISME alleges, have not been able to get B plus rating.

“Not only BLR rating increases cost but offers benefit neither the borrower nor the lander”, added FISME President.    

FISME has sought complete suspension of Basel norms for three years to allow flexibility needed by Banks to extend to credit to help MSME sector in post Covid world.