ICRA & Canara Bank signs MoU to assign ratings

ICRA Ltd has announced that the Company and Canara Bank has signed a Memorandum of Understanding (MoU) under which the Company will assign ratings to Small Enterprises (SEs) / Small Scale Industries (SSIs) and Small and Medium Enterprises (SMEs) that are borrowers of the Bangalore headquartered banks. According to MOU, the Rating assigned would be communicated along with a Rating Rational directly to Canara Bank. The Rating would be valid for a period of one year from the date of Rating assignment letter.

The SE / SSI ratings will be carried out under the National Small Industries Corporation - ICRA (NSIC-ICRA) Performance and Credit Rating Scheme for SSIs. The SME ratings, on the other hand will be assigned under the ICRA-SME Rating Scale. To assist potential and existing SE / SSI and SME borrowers of Canara Bank in obtaining ratings, the Company is offering special terms to borrowers covered by the MoU.

The MoU between the Company and Canara Bank seeks to deliver a number of benefits to the bank as well its borrowers. For Canara Bank, the Company ratings would serve as an objective and scientific input in decision making, and provide assistance in risk pricing, besides acting as an input in the setting of collateral requirements for borrowers, and facilitating future deals involving collateralised bond and loan obligations (CBO and CLOs).

As for Canara Bank's borrowers, they would be able to obtain the Company ratings at a relatively low cost. An ICRA rating may also place the rated entity in a superior position to possibly obtain competitive credit terms from Canara Bank and the benefit of faster loan processing.

Source : Equity Bulls

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