To improve credit off take by the industry, Assocham has suggested that banks and lending institutions should increase the credit-deposit ratio, which has slumped to around 54 per cent.
"A transparent system of credit rating by banks is needed and the rating should be disclosed to the concerned borrower and done in a holistic manner," Assocham said in a statement in Tuesday.
The objective of such a rating exercise should be to inform the borrowing units about the areas in which their performance has fallen below the credit rating parameter and to counsel them to perform better and measure up and not to penalise with discriminatory higher interest, Assocham said.
Assocham said banks should treat the borrowing corporates as life partners in the growth process and frankly discuss with them the relative issues.
Corporates should also share their concerns and problems in a straightforward manner to get banks' help, it said adding banks should distinguish cases where problems are more due to external factor including economic slowdown, from those cases that may be related to internal management problems.
At present, commercial banks and financial institutions, which provide working capital and term finance to the corporate borrowers generally demand personal guarantees from the borrowers besides collaterals, which causes avoidable hardships particularly to SMEs, it said.
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