GUWAHATI: The central government on Thursday, March 6, launched a new credit assessment model for MSMEs based on digital footprints. The initiative was unveiled during a post-budget interaction by Union Finance Minister Nirmala Sitharaman and Uttar Pradesh’s Finance Minister Pankaj Chaudhary.
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This decision has been taken to supplement the Union Budget 2024-25 announcement that public sector banks (PSBs) will develop in-house credit assessment capabilities rather than relying on external agencies.
The newly launched credit assessment model will also leverage digitally fetched and verifiable data available in the financial ecosystem. The model has been implemented to create automated MSME loan appraisal processes using objective decision-making criteria for both Existing to Bank (ETB) and New to Bank (NTB) borrowers.
The assessment process will additionally incorporate various digital verification methods, including PAN authentication through NSDL, mobile and email verification via OTP, GST data retrieval via API services, bank statement analysis through account aggregators, ITR verification, and credit checks through commercial bureaus. Furthermore, fraud detection mechanisms such as Hunter checks will be conducted using API-based systems.
This digitally-driven approach is expected to benefit MSMEs by reducing paperwork and the need for branch visits, enabling online applications without hassle, providing instant in-principle loan approvals, and streamlining credit processing. The model ensures an end-to-end Straight Through Process (STP), reduces turnaround time (TAT), and facilitates objective decision-making based on transactional behavior and credit history.
Moreover, loans under CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) will not require physical collateral securities.
