Did PSBs Sanction 98,995 MSME Loan Applications Under New Credit Assessment Model?
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Synopsis
Discover how public sector banks in India have transformed the MSME loan application process under the New Credit Assessment Model, approving nearly 99,000 loans in just a few months. This innovative approach aims to enhance efficiency and reduce the time taken for loan approvals significantly.
Key Takeaways
- 98,995 MSME loan applications approved under the New Credit Assessment Model.
- Loan decisions can be made in as little as one day.
- Online submission of applications reduces paperwork.
- Objective data is used for credit assessments.
- Model enhances transparency and minimizes fraud.
New Delhi, July 29 (NationPress) The public sector banks (PSBs) have approved 98,995 MSME loan applications utilizing the New Credit Assessment Model from April 1 to July 15 of this year, as reported by the government.
According to Pankaj Chaudhary, the Minister of State for Finance, the new digital credit assessment model allows for loan approvals to be made in as little as one day, significantly improving the turnaround time (TAT) compared to traditional manual methods.
This innovative model provides numerous advantages for MSMEs, including the ability to submit applications online from any location, minimized paperwork, fewer in-branch visits, instant in-principle approvals via digital channels, smooth processing of credit applications, and decisions based on objective data and transactional behavior.
Under this model, credit decisions derive from objective data, borrower credit history, and transactional behavior. The entire process of submitting and evaluating credit requests is conducted digitally, reducing subjectivity and minimizing fraudulent activity in credit information submissions.
This approach enables a quicker, clearer, and more objective evaluation of creditworthiness through system-generated credit logic and scorecards. Business Rule Engines (BREs) will identify all risks according to the bank's credit risk management policy, as stated by the minister.
The New Digital Credit Assessment Model for MSMEs was introduced in the Union Budget 2024-25, with the goal of empowering PSBs to develop their in-house capabilities for assessing MSME credit instead of depending on external evaluations.
PSBs will create a new credit assessment framework that scores the digital footprints of MSMEs within the economy.
This model utilizes digitally retrieved and verifiable data, creating automated pathways for MSME loan assessments using objective decision-making for all applications and model-based limit evaluations for both Existing to Bank (ETB) and New to Bank (NTB) MSME borrowers.
While the new digital credit assessment model does not alter the fundamental eligibility criteria for MSME loans in terms of regulatory standards or individual bank policy guidelines, it simplifies the loan sanctioning process and provides a more user-friendly, standardized approach that relies on readily available digital data, as per government sources.
Point of View
It is essential to recognize the positive strides made by public sector banks in facilitating MSME growth. The introduction of the New Credit Assessment Model marks a significant step towards fostering entrepreneurship and economic development in India. By simplifying the loan sanctioning process and leveraging technology, this initiative can empower small businesses and drive innovation.
NationPress
30/07/2025
Frequently Asked Questions
What is the New Credit Assessment Model?
The New Credit Assessment Model is a digital framework adopted by public sector banks to evaluate MSME loan applications more efficiently, allowing for quicker loan approvals based on objective data.
How many MSME loan applications have been sanctioned?
A total of 98,995 MSME loan applications have been sanctioned under this new model between April 1 and July 15 this year.
What are the benefits of the New Credit Assessment Model?
Benefits include reduced turnaround time for loan approvals, minimized paperwork, online application submission, and decisions based on objective data.
Does the new model change eligibility criteria for MSME loans?
No, the new model does not alter the fundamental eligibility criteria for MSME loans but simplifies the application and approval processes.
When was the New Digital Credit Assessment Model announced?
The New Digital Credit Assessment Model for MSMEs was announced in the Union Budget 2024-25.
