Calcutta, Jan. 11: The Centre has expressed its willingness to take a stake in the credit rating agency supposed to be floated by public sector banks for assessing the credit-worthiness of the small scale sector.

A bank official said, “The Centre is keen to take a stake in the credit rating agency. The government feels that this move will expedite the formation of the agency.”

The Centre has sounded out public sector banks about floating a credit rating agency exclusively for the small-scale industry (SSI).

The need for an agency has been felt as the industry cannot afford the fees charged by Crisil, Icra, Care and Fitch.

The availability of credit and the interest rate charged to the small-scale industry hinges on their credit-worthiness. Therefore, a credit assessment can facilitate financial assistance from banks and institutions.

The government is keen to work out a solution for the small-scale industry and is considering setting up a rating mechanism for these units, a finance ministry official said.

The small-scale industry has faced difficulties in procuring loans due to small size and level of operations. The units got delayed, inadequate and costly credit after offering manifold collateral.

There are around 35 lakh small-scale units in India manufacturing over 7500 items. They account for 39 per cent of industrial production, 34 per cent of exports and provide employment to around two crore people.

The rating of these units can impact the perception of lending institutions and materially affect the rate of interest at which it can borrow funds.

“The Centre wants to give an impetus to the sector as it contributes significantly to exports,” the official said.

The official added that Administrative Staff College of India, which was entrusted with the task of examining the laws, rules and regulations affecting the small-scale industry, had submitted its final draft report to the government recommending a single, model law for the sector.

One of the common complaints from the sector pertains to the prevalence of ‘Inspector Raj’ owing to a plethora of acts, rules and regulations relating to registration and location, labour and welfare measures, including safety, security and environment.