New Delhi, July 29 (KNN) The Public Sector Banks (PSBs) have sanctioned a total of 98,995 MSME loan applications under the New Digital Credit Assessment Model between April 1 and July 15, 2025, Union Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha in a written reply on Monday.
The model, announced in the Union Budget 2024–25 and officially launched by Finance Minister Nirmala Sitharaman on March 6, 2025, aims to overhaul the credit appraisal process for Micro, Small and Medium Enterprises (MSMEs) by leveraging digital footprints and verifiable data sources.
Under the new model, PSBs have been tasked with building in-house capabilities to assess MSME creditworthiness digitally, replacing reliance on manual underwriting and third-party assessments.
The model facilitates automated, objective loan appraisals for both Existing to Bank (ETB) and New to Bank (NTB) borrowers.
The digital credit assessment process utilises a wide array of data points, including PAN verification via NSDL, mobile and email OTP authentication, API-based GST data retrieval, ITR uploads, bank statement analysis through Account Aggregators, credit bureau reports, and fraud detection APIs.
This enables a fully digital, standardised journey—from application to sanction—without requiring physical documentation or branch visits.
Chaudhary clarified that while the model introduces technological innovation, it does not alter the fundamental eligibility criteria or regulatory guidelines for MSME loans.
Rather, it streamlines the sanction process, significantly reduces turnaround time—often to within a single day—and offers greater transparency and consistency in credit decisions.
Key benefits for MSMEs include reduced paperwork, instant in-principle digital approvals, fewer in-person interactions, and a credit evaluation based on transactional behaviour and verifiable digital records.
The use of Business Rule Engines (BREs) ensures that banks’ internal credit risk policies are comprehensively applied, minimising subjectivity and enhancing fraud detection.
(KNN Bureau)
