FM launches digital footprint-based credit assessment model for MSMEs

Delhi, Mar 6, 2025

The Finance Ministry statement further noted that the benefits to MSMEs by use of this model includes submission of application from anywhere through online mode, reduced paperwork and branch visit

Union Finance Minister Nirmala Sitharaman on Thursday launched the New Credit Assessment Model based on the scoring of digital footprints of MSMEs (micro, small and medium enterprises) in post-Budget interaction at Visakhapatnam.

Minister of state, finance Pankaj Chaudhary was also present at the occasion.

The finance minister had in her Union Budget 2024-25 speech announced that public sector banks (PSBs) will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.

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,” said a finance ministry statement.

The digital footprints used by the model may include name and pan authentication using NSDL, mobile and e-mail 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.

“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,” added the finance ministry.

[The Business Standard]