Public Sector Banks have sanctioned more than 3.96 lakh loan applications worth over ₹52,300 crore to Micro, Small and Medium Enterprises under a new Credit Assessment Model based on digital credit underwriting. The model, introduced in 2025, uses verifiable digital data to speed up loan appraisal, reduce paperwork and improve access to formal credit for small businesses.
Digital Credit Assessment Model
The Credit Assessment Model uses borrowers’ digital footprints to make loan decisions faster and more objective. It automates appraisal for both existing and new MSME customers. The system relies on digitally fetched information from the financial ecosystem rather than manual document submission.
Key Digital Checks Used
The model carries out several verification steps, including:
- KYC authentication.
- Mobile and email verification.
- GST data analysis.
- Bank statement scrutiny through account aggregators.
- Income tax return verification.
- Credit checks using Credit Information Companies.
- Fraud checks and other due diligence measures.
Impact on MSME Lending
The digital process has enabled entrepreneurs to apply online from anywhere and at any time. It has reduced branch visits and physical documentation. The system also supports instant in-principle sanctions and faster turnaround time. Loan decisions are based on transactional behaviour and credit history, improving transparency in lending.
Integration With Credit Support Systems
The framework is linked with the Credit Guarantee Fund Trust for Micro and Small Enterprises. Applications are routed through the Jan Samarth Portal, which provides an end-to-end digital journey for MSME loans within bank-defined limits. Multiple application programming interfaces are used for due diligence and integration with credit guarantee platforms.
Last Modified: April 27, 2026