In order to support banks and credit institutions to better understand and manage the change in the risk composition of micro, small and medium enterprise (MSME) portfolios, TransUnion CIBIL today launched the enhanced CIBIL MSME Rank (CMR).
The solution now scores entities that have an aggregate credit exposure of less than ₹10 lakhs- this in addition to the MSMEs that are in the aggregate credit exposure segment of ₹10 lakhs to ₹50 crores from the earlier version of the CMR.
CMR is a credit risk solution that uses machine learning algorithms to predict the probability of an MSME becoming non-performing asset (NPA) in the next 12 months. CMR assigns a ranking on a scale of one to ten to the MSME based on its credit history data. CMR-1 is assigned to the least risky MSME and CMR-10 to the most risky MSME. The higher the CMR, the greater the risk of NPA associated with the MSME. Enabling greater economic opportunities for 55 lakh very small businesses
Currently in India, total lending to MSMEs with an aggregate credit exposure up to ₹50 crores, is estimated at ₹17.94 lakh crores and represents ~28% of commercial credit outstanding. The total onbalance sheet commercial credit exposure stands at ₹64.04 lakh crores in India. The very small micro vertical (less than ₹10 Lakhs aggregate exposure) of the MSME segment, grew by 4.7% over a one year period starting Dec’18 to Dec’19, and comprises 55 lakh very small business entities having ₹ 93 thousand crores in loan balances.
Enhanced CIBIL MSME Rank at a glance • CMR is a credit risk rank for MSMEs that predicts the probability of an MSME becoming NPA in the next 12 months • TransUnion CIBIL has considered all the requirements of a Basel compliant model while developing CMR • CMR is applicable to MSMEs with aggregate commercial borrowings of up to ₹50 crores. • CMR is trained on over 7 years of through-the-cycle (TTC) credit history data • CMR is calculated based on 24 months of the MSME’s credit history on the bureau • CMR range: CMR-1 to CMR-10; CMR-1 denoting the lowest credit risk and probability of default and CMR-10 denoting highest risk and probability of default. • Currently around 90 lakhs MSMEs are eligible to be ranked on CMR of which 55 Lakhs are very small business entities with aggregate credit exposure of below ₹10 Lakhs