Oriental Bank of Commerce offers lower interest rates to MSMEs with a good CIBIL MSME Rank

Move estimated to benefit 11 lakh MSME borrowers having CMR1 to CMR3

Mumbai, 23 January, 2019 – MSMEs with a good CIBIL MSME Rank (CMR) can now avail a lower rate of interest on loans from Oriental Bank of Commerce. 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, Oriental Bank of Commerce will offer up to 0.25% concession on interest rates to MSMEs with CMR1 to CMR3 and internal risk rating of OBC1 to OBC3. Speaking on this offering for MSMEs, Shri. Mukesh Kumar Jain, Managing Director & Chief Executive Officer, Oriental Bank of Commerce, said, “Oriental Bank of Commerce is committed to driving access to finance for MSMEs while ensuring profitable growth of credit portfolios. By offering lower rate of interest to our MSME customers who have a good credit history and CMR, we are rewarding good borrowers and promoting a disciplined credit culture along with ensuring healthy quality of our MSME portfolio.”

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 (NIM) in the MSME segment ranges from 4% to 7% 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% - 5%, 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 benefit from this interest rate policy.

The Chart below has the distribution of all the MSMEs in the country across CMR. The 11 lakh MSMEs with CMR in the range of 1 to 3 constitute over 36% of all the MSMEs in the country.

TransUnion CIBIL Data Analysis shows that around 11 lakh MSMEs in India have a CMR ranging between CMR 1 to 3 and therefore are eligible for lower rate of interest from Oriental Bank of Commerce under this policy.

Commending this policy by Oriental Bank of Commerce, the Managing Director and CEO of TransUnion CIBIL, Mr. Satish Pillai said, “MSME segment continues to be profitable for lenders and with risk based pricing of MSME loans, lenders can further strengthen the lending process while significantly controlling the quality of portfolios. By offering lower rate of interest based on CMR, Oriental Bank of Commerce will be able to drive access to finance for deserving MSMEs and accelerate profitable growth. We believe that CMR based pricing is the next evolutionary milestone in India’s MSME ecosystem as more and more credit institutions adopt this policy.”


About Oriental Bank of Commerce

Oriental Bank of Commerce is a leading public sector bank, best known in the industry for its customer service. Bank has a wide range of products / services being offered through its 2373 banking outlets and also through digital channels.

Bank is fast moving to shape itself as MSME & retail bank in India. Bank has re-designed its structure and formed different segment specific clusters equipped with specialized officers like Retail, MSME and Recovery etc. for focused work environment with specialized officers. Bank offers different borrower friendly schemes namely MSME Plus, OBLS (Loan against property), Oriental Hotel & Restaurant, Oriental Sanjeevani (For Doctors and Medical facilitation centre), Oriental Fleet etc. To cater to the needs of Business class, Micro & small entrepreneurs and other MUDRA, Stand Up and Start up aspirants. Bank has already implemented a Rule Based Lending for Mudra loans where credit decision is based on the facts submitted by applicant without any human interference to avoid discrimination. All other loans are also processed in the OLS a system driven processing module for the standardized processing. Bank has already on boarded on the “psbloansin59minutes” portal to tap the maximum business at competitive pricing.

About TransUnion CIBIL

TransUnion CIBIL is India’s leading credit information company and maintains one of the largest repositories of credit information globally. We have over 3000 members–including all leading banks, financial institutions, non-banking financial companies and housing finance companies–and maintain more than 1000 million credit records of individuals and businesses.

Our mission is to create information solutions that enable businesses to grow and give consumers faster, cheaper access to credit and other services. We create value for our members by helping them manage risk and devise appropriate lending strategies to reduce costs and increase portfolio profitability. With comprehensive, reliable information on consumer and commercial borrowers, they are able to make sound credit decisions about individuals and businesses. Through the power of information, TransUnion CIBIL is working to support our members drive credit penetration and financial inclusion for building a stronger economy.