: Finance Minister Nirmala Sitharaman and Minister of State for Finance Pankaj Chaudhary unveiled a new Credit Assessment Model for MSMEs, leveraging digital footprint-based scoring.
Announced in the Union Budget 2024-25, this initiative enables public sector banks (PSBs) to independently assess MSME creditworthiness, reducing reliance on external evaluations.
Launched during a post-Budget interaction in Visakhapatnam, the model marks a shift from traditional asset or turnover-based assessments. It also extends credit evaluation to MSMEs without formal accounting systems, offering a more inclusive approach, according to an official statement.
New Credit Assessment Model
PSBs will develop a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy. 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 statement said.
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.
New Credit Assessment Model Benefits
The benefits to MSMEs by use of this model include submission of applications from anywhere through online mode, reduced paperwork and branch visits, 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 statement added. (With IANS Inputs)
