Ref: 416/Rating Agency/10

June 28, 2010

Dr. D. Subba Rao,
Governor
Reserve Bank of India
Central Office Building
Shahid Bhagat Singh Road
Mumbai-400 001.

Respected Sir,

We would like to bring your kind attention to the issue that banks are now insisting the knitwear export units to go for a rating given by the assigned agencies, failing which, the banks may levy their customers. 

We strongly feel that the exact performance of the unit, financial condition and other qualitative factors that have bearing on credit worthiness of the concerned units could be gauged by their bankers only, because of their long association with the customers, rather than outside rating agencies. It may be noted that the decline in performance of the units for a particular crucial period would be well judged by the banks and they could also ascertain the fact that the concerned unit could be retain its performance with the necessary impetus at right time. 

Our concern is that the Rating Agencies are charging fees in the range of Rs.5 lakhs to Rs.10 lakhs and we wish to make a note of it that payment of charges to the outside Rating Agency may not be possible at a time when the Exporting units in Tirupur are finding it difficult to meet the statutory financial requirements, and taking a lot of efforts to cut down their costs mainly to sustain in the business.

If the guidelines prescribe certain qualifying criteria, the units concerned may be rated by agency like SMERA.

Considering the crucial period, we request you to kindly advise the banks not to insist for rating of the units by outside Rating Agencies for another three years. 

Thanking you

Yours faithfully

 Sd/-

  A. Sakthivel

President