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Government launches new credit assessment model for MSMEs
Mar-07-2025

In a major boost to credit accessibility for Micro, Small, and Medium Enterprises (MSMEs), the government has launched the New Credit Assessment Model based on the scoring of digital footprints of MSMEs. This credit assessment model will leverage the digitally fetched and verifiable data available in the ecosystem and devise automated journeys for MSME Loan appraisal using objective decisioning for all loan applications and model-based limit assessment for both Existing to Bank (ETB) as well as New to Bank (NTB) MSME borrowers.

The digital footprints used by the model may include Name and Pan authentication using NSDL, Mobile and email verification using OTP, API fetch of GST data through service providers, Bank Statement Analysis using account aggregator, ITR upload and verification, API enabled commercial and consumer bureau fetch and due diligence using CICs, fraud checks, Hunter checks through APIs, among others.

This model will provide various benefits to MSMEs including submission of application from anywhere through online mode, reduced paperwork and Branch visit, instant in-principle sanction through digital mode, seamless processing of credit proposals, end to end straight through process (STP), reduced turnaround time (TAT), Credit decision based on objective data/ Transactional behaviour and credit history, no Physical collateral securities for loans covered under CGTMSE, among others.

The credit assessment model for MSMEs based on digital footprints is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria. That will also cover MSMEs without a formal accounting system.


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