Union Finance Minister & MoS of Finance Unveil New Credit Assessment Model for MSMEs.
National
In March 2025, Union Minister Nirmala Sitharaman, Ministry of Finance (MoF) and Ministry of Corporate Affairs (MOCA), along with Union Minister of State (MoS) Pankaj Chaudhary, MoF, launched the New Credit Assessment Model based on the scoring of digital footprints of Micro, Small, and Medium Enterprises (MSMEs) during a post-budget interaction held in Visakhapatnam, Andhra Pradesh (AP).
- In the Union Budget for Financial Year 2024-25 (FY25), MoF announced that Public Sector Banks (PSBs) will develop in-house capabilities to assess MSMEs for credit, reducing their reliance on external evaluation.
- The new model will leverage digitally fetched and verifiable data for credit assessment, enabling automated MSME loan appraisal with objective decision-making for all loan applications. It will facilitate model-based limit assessment for both Existing to Bank (ETB) and New to Bank (NTB) MSME borrowers.
- The assessment will incorporate various digital verifications, including name and PAN authentication via NSDL, mobile and email verification through OTP, API-based GST data fetch, bank statement analysis using account aggregators, and API-enabled commercial and consumer bureau data access.
Main Point :- (i) MSMEs can apply for loans online from anywhere, reducing paperwork and branch visits. The process ensures quick in-principle sanctioning of loans via digital mode and smooth processing of credit proposals.
(ii) The model introduces an end-to-end Straight Through Process (STP), significantly reducing the Turnaround Time (TAT) for loan approvals.
(iii) Unlike conventional credit eligibility assessments based solely on assets or turnover, this model allows MSMEs without a formal accounting system to be covered under the new framework.
About Ministry of Finance (MoF)
Minister : Smt. Nirmala Sitharaman
Headquarters : New Delhi
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