The full form of SMERA is: SMERA (SMALL AND MEDIUM ENTERPRISE RATING AGENCY OF INDIA)
What is SMERA in Banking?
SMERA was formed on 1st January 2020 by the Ministry of Finance of the Government of India and the Reserve Bank of India. SMERA ratings provide the micro, small and medium business in getting credibility to be offered loans in order to grow their Businesses.
SMERA comes under acuite research and rating organization which is registered with SEBI (securities and exchange board of India) as a credit rating firm.
SMERA is the world’s first MSME focused rating agency and is an integral part of the risk assessment process in banks.
What are credit rating agencies?
Credit rating agencies grade the businesses on the basis of their creditworthiness similar to how credit card companies give credit score to the credit card users.
These ratings allow the money lenders determining if the borrower will be able to timely repay the loan or not.
This rating is based on previous payments, utilization ratio and consumption habits etc.
Also read: Full form of CIF in banking sector
Do we need credit rating agencies?
Credit rating organizations are important to conduct unbiased ratings which don't involve a conflict of interest since they are not directly involved in the trading process.
How many credit rating agencies are there in India?
Six credit rating agencies which are authorized by SEBI are present in India which help borrowers show their repaying credibility to lenders.
The following are the names of these six agencies:
- Fitch India
- Brickwork Rating