Finance, Income and Trade Rank (FIT Rank) for MSMEs

General Studies ( Prelim) Indian Economy

23-Jul-24

Context: The Government has been working to ensure the welfare of MSMEs through various schemes and programmes aimed at providing payment solutions through emerging technologies.

Under the mentorship of SIDBI, CIBIL, in collaboration with Online PSB Loans Limited (OPL), launched FIT rank by leveraging the power of Goods and Services Tax (GST), Bank Statements, and Income Tax returns (ITR) information to provide a ranking model for MSME lending.

Finance, Income and Trade Rank (FIT Rank)

Finance, Income and Trade Rank (FIT Rank) is a ranking model to rank the Ministry of Micro, Small and Medium Enterprises in India.
The ranking model uses machine learning algorithms to arrive at the probability of an MSME becoming a non- performing asset in the next 12 months.
It is based on its financial, income and trade data.
The ranking is done on a scale of 1 to 10 with FIT Rank 1 for the least risky MSME and FIT Rank 10 for the most at-risk MSME.
Each FIT rank corresponds to a Probability of Default (PD) and lower the FIT Rank, lower is the PD associated with the MSME.
Under the Small Industries Development Bank of India (SIDBI) and CIBIL, in in collaboration with Online PSB Loans Limited (OPL) launched the FIT rank.
It was launched by leveraging the power of Goods and Services Tax (GST), Bank Statements, and Income Tax returns (ITR) information to provide a ranking model for MSME lending.
The ranking uses information from multiple sources to provide a unified FIT data for an MSME, enabling improved risk differentiation and sharpened credit underwriting for MSME loans.
FIT Rank is also being used in GST Sahay platform as well.

GST Sahay App

Is an On-Tap Invoice Based Financing (IBF) Application.
It enables the provision of completely paperless, presence less, collateral free, cash-flow based and through financing to MSMEs for small ticket loans for their Purchase invoices and sales invoices.
It was developed by SIDBI in association with Indian Software Products Industry Round Table (iSPIRT) and Online PSB Loans Ltd. (OPL).
Small Industries Development Bank of India (SIDBI) –was set up on 2nd April 1990 under an Act of Indian Parliament.
It acts as the Principal Financial Institution for Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME).