Rating agency for SMEs to be set up
US-based Dun & Bradstreet, a leading provider of global business information, tools and commercial insight, and BRAC Bank recently signed a memorandum of understanding to set up a rating agency for small and medium enterprises in Bangladesh, says a press release.
Rating companies provide independent and objective assessments of the credit worthiness of business entities. A company with a good credit rating enables it to secure external funding with greater ease and possibly at a lower cost.
Saikat Poddar, regional sales director (South Asia) of Dun & Bradstreet, said “Banks and other financiers need tools to better assess credit risk for SMEs in a scientific manner. By setting up a rating agency dedicated to SMEs in Bangladesh, Dun & Bradstreet proposes to enhance transparency.”
Emphasising the significance of SMEs in Bangladesh's economy, Imran Rahman, managing director and CEO of BRAC Bank said, "The SMEs are undoubtedly quite predominant in the industrial structure of Bangladesh comprising over 90 percent of all industrial units. Together, the various categories of SMEs are reported to contribute between 80 percent and 85 percent of industrial employment and 23 percent of total civilian employment."
"These Micro, Small and Medium Enterprises (MSMEs) employ a total of 31 million people, equivalent to 40 percent of the population of Bangladesh, aged 15 years and above," he added.
A credit rating agency for SMEs will enable banks to reduce the evaluation cost and delivery time thereby reducing transaction costs and lend based upon the established credibility of the SMEs rather than the collateral offered or subjective market reputation.
SMEs, on the other hand, will be able to gain a better bargain based upon established creditability evidenced from the rating of a neutral third party.
Established in 1841 in America, Dun & Bradstreet has had extensive world wide experience in conducting credit ratings for small businesses.
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