Taqeem is a risk assessment system for SMEs (Small and Medium Enterprises) by SIMAH. The system allows members to evaluate the risk of small and medium firms' and generates a risk scores to kame sound future decisions. Taqeem takes into account sectors’ data, SME financials, management and other non-financial aspects.
Launched in 2011, Taqeem serves to create a higher level of credit transparency in the local business arena by sharing information on payment behavior, associated with trade credit and credit facilities of borrowers. Members can have more relevant and updated information for their use in their risk management process and, in turn, are able to make sensible business decisions and manage their credit risk better. Moreover, Taqeem also plays the role of helping SMEs to perform self-evaluation and gauge their own credit standings.
Taqeem helps member’s asses the 3 Cs of the SMEs
Character: of the SME with regards to legitimacy on an application for credit.
Capacity: potential exposure and risk involved in extending credit to the SME.
Credit history: insights into payment index & trends, defaults, winding up and litigations.
SWOT: Taqeem enables members to conduct a 360 SWOT (Strength, weakness, opportunity threat) assessment of the SME’s with regards to its financial potential and take informed lending decisions. Members can evaluate the SME’s creditworthiness whenever they apply for loans or additional credit lines ensuring accuracy and a better understanding of the borrower’s financial standing.
Self improvement: Taqeem is a tool with the SME’s for self-improvement – the SIMAH score SME scale highlights the financial strengths and weaknesses and acts as a trigger for self-correction – the score scale is like a financial report card for the SME. Regular renewal of ratings not only helps improve the SME’s performance but also builds confidence within the lender fraternity and trading channel.
Concessional funding: A good rating can help SME’s gain faster and cheaper credit for their business ventures. A good score and report may encourage financial institutions to offer preferential interest rates and a “gold class” service including reduction in the loan processing time and additional benefits.
SIMAH score SME’S scale: The results of these risks vary from 1 to 20, where 1 is the lowest risk and 20 is the highest. Furthermore, the result of 21 and 22 are indications of Non-Performing Facilities or Non-Identical Conditions. In addition, “TAQEEM” shows other equivalent risk scales and they are “Moody’s” and “Standard & Poor’s”.
Taqeem represents an important step in encouraging banks to finance SMEs in a practical manner that takes into account the degree of solvency and risk level of each company according to its historical record. Taqeem looks after protecting of the two parties of the relationship, represented by the financing body and SME, through risk measurement in a uniform professional manner.
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