PHDCCI calls for transparent credit rating

Wednesday, 25 June 2003, 07:00 Hrs
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CHANDIGARH: The PHDCCI, an industry lobby representing 11 Indian states, Tuesday called for a "transparent" system of credit rating by banks.

The chamber body said such a rating exercise should inform borrowing units about the areas where their performance has fallen below credit rating parameters. Such an exercise should also counsel units on how to perform better.

Currently, almost all commercial banks keep credit ratings confidential, charging higher interest from units ranked low.

PHDCCI felt banks should adopt a flexible system of charging interest, depending on the type of industry, working of the particular unit and other factors that might have affected its working.

It also suggested that banks should work towards increasing the credit-deposit ratio to more than 55 percent and increase flow of credit to exporters, infrastructure projects and small and medium enterprises.

The chamber stated: "It is a paradoxical situation that in spite of adequate liquidity, banks are not able to provide loans as credit off-take is low and new investments are not coming forth.

"A dynamic approach is required to facilitate and accelerate industrial activities in today's competitive environment."
Source: IANS
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