**Executive Summary**
This document is the Government of India's response to questions raised in Lok Sabha regarding new credit assessment models for Micro, Small, and Medium Enterprises (MSMEs). Public Sector Banks (PSBs) have developed a new credit assessment model based on the scoring of digital footprints of MSMEs, as announced in the Union Budget 2024-25 and launched in 2025. The assessment model is focused on digitizing the process and does not alter regulatory norms or policy guidelines.
**Key Points / Main Content**
* **New Credit Assessment Model Development:** Public Sector Banks (PSBs) have developed a new credit assessment model based on the scoring of digital footprints of MSMEs. This was announced in the Union Budget 2024-25 and launched in the year 2025.
* **Impact on Basic Eligibility Criteria:** The new digital credit assessment model does not change the basic eligibility criteria for MSME loans regarding regulatory norms or bank policy guidelines.
* **Simplification and Standardization:** The model simplifies the loan sanctioning process, providing a more user-friendly and standardized approach by relying on digitally available data.
* **Data Usage:** The model uses digitally fetched and verifiable data to automate MSME loan appraisal, applying objective decision-making for all loan applications and model-based limit assessment.
* **Digital Footprints:** The model uses digital footprints, including PAN authentication via National Securities Depository Limited (NSDL), mobile and email verification using OTP, Application Programming Interface (API) fetch of Goods and Services Tax (GST) data, Bank Statement Analysis using account aggregator, Income Tax Return (ITR) upload and verification, Application Programming Interface (API) enabled commercial and consumer bureau fetch and due diligence using Credit Information Companies (CICs), fraud checks, through APIs.
* **Future Developments:** There is currently no plan to develop new criteria for MSME loan disbursement, as lenders make credit decisions based on commercial considerations, Board-approved policies, and RBI guidelines.
**Impact Analysis**
**PSBs (Public Sector Banks)**
* **Impact:** PSBs are now using a new digital credit assessment model for MSME loans that simplifies and standardizes the loan approval process. The model leverages digital data for decision-making.
* **Action Required:** PSBs need to implement and utilize the new digital credit assessment model for MSME loans while adhering to existing regulatory norms, policy guidelines, Board-approved policies, and RBI guidelines.
**MSMEs (Micro, Small and Medium Enterprises)**
* **Impact:** MSMEs will experience a more user-friendly and standardized loan application process due to the use of digital data and automated assessments.
* **Action Required:** MSMEs should ensure their digital footprints (PAN, GST data, ITR, bank statements, etc.) are readily available and up-to-date for efficient loan processing.
Key Entities Referenced
New Credit Assessment Models for MSMEs: Credit assessment model developed by Public Sector Banks (PSBs) based on the scoring of digital footprints of Micro, Small and Medium Enterprises (MSMEs).
Public Sector Banks (PSBs): Banks that have developed a New Credit Assessment Model based on the scoring of digital footprints of MSMEs.
Ministry of Finance: The ministry to which the question regarding the new credit assessment models for MSMEs was addressed.
Reserve Bank of India (RBI): Regulatory body whose broad guidelines lenders follow in a deregulated credit environment when taking credit decisions.
Credit Information Bureau India Limited (CIBIL): An existing criteria based on which the loans are being disbursed for MSMEs under the Government's New Credit Assessment Model.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 264
ANSWERED ON MONDAY, 2nd FEBRUARY, 2026/ 13 MAGHA, 1947 (SAKA)
New Credit Assessment Models for MSMEs
264. SHRI LAVU SRI KRISHNA DEVARAYALU:
SHRI BASTIPATI NAGARAJU:
Will the Minister of FINANCE be pleased to state:
(a) whether it is a fact that Public Sector Banks plan to develop a new credit assessment model,
based on the scoring of digital footprints of Micro, Small and Medium Enterprises (MSMEs), if
so, the details thereof;
(b) whether the said model entails changing the basic eligibility criteria for MSME loans in terms
of regulatory norms or policy guidelines, if so, the details of the new criteria that has been
evolved;
(c) if not, whether Credit Information Bureau India Limited (CIBIL) remains the criteria based
on which the loans are being disbursed for MSMEs under the Government's New Credit
Assessment Model;
(d) whether the Government aims to develop a new criteria based on which loans is to be
disbursed to MSMEs, if so, the details thereof; and
(e) if not, the reasons therefor?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) As announced in the Union Budget 2024-25 and launched in the year 2025, Public Sector
Banks (PSBs) have already developed a New Credit Assessment Model based on the scoring of
digital footprints of Micro, Small and Medium Enterprises (MSMEs).
(b) & (c) The introduction of the new digital credit assessment model does not involve any
fundamental changes in the basic eligibility criteria for MSME loans in terms of regulatory norms
or policy guidelines of individual bank. However, it simplifies the process of sanctioning loans
and offers a more user-friendly and standardized approach by relying on digitally available data.
The model leverages the digitally fetched and verifiable data and devises automated journeys for
MSME Loan appraisal using objective decisioning for all loan applications and model-based
limit assessment for both Existing to Bank (ETB) as well as New to Bank (NTB) MSME
borrowers. The digital footprints used by the model may include Pan authentication using
National Securities Depository Limited (NSDL), Mobile and email verification using One TimePassword (OTP), Application Programming Interface (API) fetch of Goods and Services Tax
(GST) data through service providers, Bank Statement Analysis using account aggregator,
Income Tax Return (ITR) upload and verification, Application Programming Interface (API)
enabled commercial and consumer bureau fetch and due diligence using Credit Information
Companies (CICs), fraud checks, through APIs, among others.
(d) & (e) No such proposal is under consideration at present. However, in a deregulated credit
environment, lenders take credit decisions as per their commercial considerations based on their
Board approved policies and broad regulatory guidelines of Reserve Bank of India (RBI).
******