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Business Economy


OBC offers lower interest rates to MSMEs with good CIBIL MSME rank

New Delhi, Jan 23 (UNI) The Oriental Bank of Commerce on Wednesday announced that it would offer loans on lower interest rates to MSMEs who have a good CIBIL MSME Rank (CMR).
CMR uses machine learning algorithms to predict the probability of an MSME becoming NPA in the next 12 months. It provides a ranking to the MSME based on its credit history data on a scale of 1 to 10, CMR1 being the least risky MSME and CMR10 being the most risky MSME. The higher the CMR, the higher is the risk of NPA associated with the MSME.

Based on this policy, the OBC Bank will offer up to 0.25 per cent concession on interest rates to MSMEs with CMR1 to CMR3 and internal risk rating of OBC1 to OBC3, Bank Managing Director and Chief Executive Officer Mukesh Kumar Jain said here.
The fourth edition of TU CIBIL MSME Pulse indicates that MSME segment continues to be profitable for the credit industry and promises potential of growth and healthy returns. The net interest margin in the MSME segment ranges from 4 per cent to 7 per cent depending on type of loan and risk associated with the borrower.
The Return on Asset (ROA) of lending in the segment is estimated at 2 per cent – 5 per cent, which is a healthy rate of return. An analysis from TransUnion CIBIL’s commercial bureau shows that there are more than 11 lakh MSMEs with CMR of 3 or better, which are eligible to get benefit from this interest rate policy.

UNI SW SHK1519
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