Now universal enterprise IDs for small firms
ECONOMY & POLICY

Now universal enterprise IDs for small firms

According to an internal document, the Union government is working on a Universal Enterprise ID system to help strengthen the credit ratings of small businesses, which are the engines of the Indian economy.

A group of MSMEs will form a special purpose vehicle (SPV) under the proposal, which may be announced in the Union budget, to borrow from banks in a single transaction and on-lend to its members.

Credit rating agencies are also expected to develop new models for assessing the creditworthiness of MSMEs.

In 2019, an expert committee on micro, small, and medium enterprises (MSMEs) led by former Sebi chairman U.K. Sinha proposed the enterprise ID to improve credit availability to these entities. According to the 73rd round of the National Sample Survey, India has approximately 63.39 million MSMEs (NSS).

The Sinha committee recommended making MSME rating products more relevant and predictive of credit performance by encouraging rating agencies to build more 360-degree scoring models using newer data sources such as utility bills and tax payments, among others.

"The implementation of a Universal Enterprise ID will help this market. Rating agencies may need to develop newer offerings to encourage the growth of cash flow-based lending. "Banks must specify the workflow in their credit appraisal process if the MSME has a credit rating available to it," the committee stated in a report.

The Sinha committee report found that there is no common identifier through which an entity or enterprise can be recognised, referenced, and electronically verified, and enterprises "face problems when they approach other authorities for any permissions".

The panel sought to implement enterprise ID using PAN on a mission-mode basis in order to ensure credit availability to MSMEs.

Emails sent to the ministries of micro, small, and medium enterprises and finance went unanswered as of press time.

According to an internal document, the Union government is working on a Universal Enterprise ID system to help strengthen the credit ratings of small businesses, which are the engines of the Indian economy. A group of MSMEs will form a special purpose vehicle (SPV) under the proposal, which may be announced in the Union budget, to borrow from banks in a single transaction and on-lend to its members. Credit rating agencies are also expected to develop new models for assessing the creditworthiness of MSMEs. In 2019, an expert committee on micro, small, and medium enterprises (MSMEs) led by former Sebi chairman U.K. Sinha proposed the enterprise ID to improve credit availability to these entities. According to the 73rd round of the National Sample Survey, India has approximately 63.39 million MSMEs (NSS). The Sinha committee recommended making MSME rating products more relevant and predictive of credit performance by encouraging rating agencies to build more 360-degree scoring models using newer data sources such as utility bills and tax payments, among others. The implementation of a Universal Enterprise ID will help this market. Rating agencies may need to develop newer offerings to encourage the growth of cash flow-based lending. Banks must specify the workflow in their credit appraisal process if the MSME has a credit rating available to it, the committee stated in a report. The Sinha committee report found that there is no common identifier through which an entity or enterprise can be recognised, referenced, and electronically verified, and enterprises face problems when they approach other authorities for any permissions. The panel sought to implement enterprise ID using PAN on a mission-mode basis in order to ensure credit availability to MSMEs. Emails sent to the ministries of micro, small, and medium enterprises and finance went unanswered as of press time.

Next Story
Building Material

JSW Paints to Acquire Majority Stake in Akzo Nobel India

JSW Paints has signed definitive agreements to acquire up to 74.76 per cent stake in Akzo Nobel India Limited (ANIL) from Akzo Nobel N.V. and its affiliates. The proposed transaction is valued at up to Rs 89.86 billion, subject to closing adjustments. The deal is contingent on approval from the Competition Commission of India and the successful completion of a mandatory open offer to ANIL’s public shareholders. Part of the US$ 23 billion JSW Group, JSW Paints is among the fastest-growing players in India's paint industry. ANIL, a key player in decorative and industrial paints, brin..

Next Story
Infrastructure Energy

Greenko Founders Secure $650 Million Loan to Reclaim Stake

Greenko Energy Holdings co founders Anil Chalamalasetty and Mahesh Kolli have clinched a $650 million private credit facility that will enable them to repurchase 17.5 per cent of the clean energy producer from Japan’s Orix Corp, leaving Orix with a residual 2.5 per cent.The two year loan comes from a consortium of lenders including Keppel Credit, SeaTown Holdings International, BlackRock, Varde Partners, Broad Peak Investment Advisers, Nomura and Sumitomo Mitsui Banking Corp. The transaction is one of India’s largest private credit financings this year, reflec..

Next Story
Infrastructure Energy

Inox Neo Buys Skypower Solar India for Rs 2.65 Billion

Inox Clean Energy’s renewable arm, Inox Neo Energies, has completed the acquisition of Skypower Solar India at an enterprise value of about Rs 2.65 billion. The portfolio comprises a 50 MW (AC) / 57.5 MW (DC) solar plant in Khandwa district, Madhya Pradesh, commissioned in the 2018 financial year and backed by a 25 year power purchase agreement with Madhya Pradesh Power Management Company.Chief Executive Bharat Saxena said the project’s robust operating record makes it value accretive from day one and fits the group’s inorganic growth plan. The firm cont..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?