CIBIL MSME RANK (CMR)

CIBIL MSME Rank (CMR) indicates the creditworthiness of Micro, Small, and Medium Enterprises (MSMEs). This ranking system allows financial institutions to assess the risk associated with offering credit facilities to businesses, particularly in the unorganised MSME sector.

 

With a good rank of 1 or 2, your enterprise can access formal sources of finance quickly and affordably, be it to finance working capital requirements or leverage growth opportunities.

CMR in banking is a credit risk assessment tool for MSMEs and business entities. This rating denotes the probability of the enterprise defaulting on a loan over a period of one year. It also has other uses, such as:

• Helps financial institutions assess MSMEs 

• Eases evaluating loan applications, thus supports quicker decision-making 

• Aids in making decisions about renewing loans or offering higher credit limits

• Helps in portfolio management and monitoring, risk-based loan pricing and rule-based limit setting for quicker digital disbursement 

• Facilitates in pre-approving MSMEs for credit solutions

While a personal CIBIL score ranges between 300 and 900, this ranking ranges between CMR 1 and CMR 10. While CMR 1 indicates the lowest risk of default, an MSME with a CMR of 10 is more likely to default on repayments.

CIBIL MSME Rank is assigned to an MSME based on its credit profile, credit behaviour and financials. MSMEs with a credit exposure of less than ₹10 Lakhs and up to ₹50 Crores qualify for this rank.

The best way to check the CMR is on the official TransUnion CIBIL website. Here is how to get your CMR ranking once you are on the homepage:

1. Select the ‘Business’ tab 

2. Choose the ‘Credit Reporting’ option available under the ‘Solutions and Products’ tab

3. Scroll down and select ‘CIBIL MSME RANK’

4. Click on ‘Check your CIBIL MSME Rank now’

5. Choose from any of the three payment models 

6. Enter your company’s GSTIN (which pre-fills the form) and click on ‘Enter GSTIN and go paperless!’ 

7. Check the box authorising TU CIBIL to verify your data

8. Once you receive the Registration ID and Transaction ID, you can login and get CMR instantly

 

If you do not want to enter your GSTIN in Step 7, you can click on ‘Continue without GSTIN to upload documents’. Enter your company’s name, entity type, and other details in the form. 

 

Choose your company ID from the drop-down list provided and mention the GST number along with your contact information. Attach a soft copy of the ID proof and continue the process to get your CIBIL rank and report.

The system of CMR ranking in CIBIL categorises businesses based on their credit risk levels. 

 

Here are different CMRs and what they entail:

Disclaimer: The risk level and probability of default figures may be updated by the credit information bureau from time to time.

 

The rank of your MSME is one of the major factors that impact the interest rate you can get on your business loan. Here’s how banks and NBFCs decide on the cost of the loan based on the rank:

Several factors determine CMR for your business, providing a comprehensive view of your business’ financial health. These include:

 

• Repayment History and Delinquency

While timely payments of existing loans translate into higher CMR, defaults and delays negatively impact your enterprise’s CIBIL rank. 

 

The total outstanding balance and any delinquency associated with a credit facility in your records also impacts the rank. 

• Credit Utilisation Ratio

It refers to the percentage of credit you have used from the total available limit. A high credit utilisation ratio generally lowers CMR as it shows high dependency on credit. 

• Industry Risk

The overall risk of the industry in which your business operates can also impact the credit standing of your business. The CMR of your MSME may be low if it operates in a high-risk industry, such as real estate or energy.

• Financial Stability

Credit bureaus generally assess business revenue, profits, and financial growth over time to determine CMR. If your business has stable revenue and growing financials, it could translate into better ranking. The overall liquidity your business enjoys also affects the rank. 

• Relationship with Lenders

The duration and history of your association with lenders also play a role in your CIBIL rank. A long and strong relationship can help your business rank higher.

A good CIBIL MSME Rank (CMR) ensures that you can easily secure funding for your business’s working capital needs, expansion, and more. Check out the other advantages your enterprise will receive:

• Lower Interest Rates

Lenders generally charge lower interest rates to businesses that have a good ranking, allowing significant savings during repayment.

• Faster Approval

A high CMR not only makes credit available to your business but also ensures a quicker disbursal, as lenders generally prioritise approval for such enterprises.

• Enhanced Reputation

A high CMR enhances your business's reputation and trustworthiness, demonstrating that you are a reliable borrower who fulfils financial obligations. This can help you get investment or private funds. 

• Better Negotiation Power

A good CMR gives you leverage when negotiating with lenders, potentially letting you secure more favourable terms.