Team siliconindia

• 98,995 MSME loans have been sanctioned by Public Sector Banks using the New Digital Credit Assessment Model between April 1 and July 15, 2025.
• Introduced in Union Budget 2024–25, the model simplifies loan processing, reduces paperwork, and enhances transparency without altering basic eligibility norms.

Public Sector Banks (PSBs) have sanctioned 98,995 MSME loan applications between April 1 and July 15, 2025, under the newly introduced Digital Credit Assessment Model, the government informed the Lok Sabha.

Responding to a question, Minister of State for Finance Pankaj Chaudhary said the new model, launched as part of the Union Budget 2024-25, significantly cuts turnaround time (TAT) for loan decisions with approvals possible within one day, compared to the longer durations under traditional, manual processes.

The new model enables a fully digital, data-driven process for MSME loan assessments, allowing businesses to apply online from anywhere, with minimal paperwork and no branch visits. Applications are assessed based on objective data, transactional behavior, and credit history, replacing subjective evaluations and reducing the risks of fraudulent or erroneous submissions.

“This model provides seamless credit processing, instant in-principle sanction, and greater transparency through system-generated scoring and logic”, the minister stated. “It also enables more accurate assessment of borrower creditworthiness via automated scorecards and Business Rule Engines (BREs) aligned with each bank’s credit risk policy”.

The model is applicable to both Existing to Bank (ETB) and New to Bank (NTB) MSME borrowers and uses verifiable digital footprints and financial data to generate model-based loan limits.

Also Read: FM Sitharaman Unveils Digital Driven Credit Model to Empower MSMEs

While the new system does not alter the basic eligibility criteria for MSME loans under existing regulatory norms, it streamlines the sanctioning process, making it faster, more user-friendly, and standardized across banks.

Announced in the 2024-25 Budget, the initiative underscores the government’s vision of empowering MSMEs through digitization and enhancing credit access by building in-house capabilities within PSBs for credit appraisal eliminating dependency on external agencies.

This reform aims to transform MSME lending in India, enabling faster access to capital, improving ease of doing business, and strengthening financial inclusion for small enterprises.