'26% of the proprietorship firms have high credit risk'

Almost 26% of the proprietorship firm population and 15% of private firm population are at a high credit risk in India, according to a report by credit bureau services company, Experian.

This report contains a commercial score, which, according to the company helps in providing a 360-degree credit assessment by combining the power of both individual and business borrowings together, which is unique in the industry.

“In India, in the formal lending space we have approximate 45% of firms set up as proprietary firms and with this associated high risk, we believe that a commercial score and account review will help the banks take informed credit decisions,” the Commercial Credit Information Report added.

Experian Credit bureau has more than 525 million trade lines, with the commercial bureau having 25 million trade lines. With a focus on innovation and leveraging its global expertise, the company is trying to strengthen its commercial bureau offerings in India through the launch of the score, account review and industry insights for businesses.

The Indian market has a large proportion of proprietorship firms. Experian commercial score with a range of 300-900, has been designed such that it provides a comprehensive view of commercial obligations of proprietors, the company said. For partnership and limited liability companies along with the score on all related individuals it will include a risk rating from 1 to 10 on the entity, thereby providing a unique way to analyse business risks for SMEs vis-à-vis medium to large companies, it added.

“The launch of commercial score and account review will go a long way in helping the business assess credit risk more efficiently. We believe that this offering will help the industry to plan their business strategy better and take more informed credit decisions, and enable opportunities for their customers,” Rajesh Kumar, Group Head, Co-Head for Retail Risk, HDFC Bank said.

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