Private lender, Karur Vysya Bank (KVB) has inked a memorandum of understanding (MoU) with SME Rating Agency of India (Smera). The MoU has been signed for financing of SME by influencing the potential of the two institutions.

Under the MoU, Smera will supply data about external credit rating by reflecting the financial position and qualitative factors linked to the worthiness of the SME and Karur Vysya Bank will extend funds for the SME.

Karur Vysya Bank has also signed a MoU with leading credit rating agency, ICRA Limited. Under this MoU, the rating agency will assign ratings to the bank`s loans and its other exposures under the standardized approach of RBI`s new capital adequacy framework for Basel-II and Karur Vysya will assign the new risk weights applicable to its borrowers under Basel-II.

It is interesting to note that KVB has always adhered to the Capital Adequacy Ratio prescribed by the RBI. In fact, the bank has mostly kept a Capital Adequacy Ratio over and above the stipulated minimum. This policy helps in maintaining a robust future asset growth.