Vishakhapatnam, March 6 : Finance Minister Nirmala Sitharaman and Minister of State for Finance Pankaj Chaudhary on Thursday launched the New Credit Assessment Model based on the scoring of digital footprints of MSMEs.
The Finance Minister had announced as part of her Union Budget 2024-25 that public sector banks (PSBs) will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.
Launched at a post-Budget interaction in Vishakhapatnam, the credit assessment model for MSMEs, based on digital footprints, is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria. It will also cover MSMEs without a formal accounting system, according to an official statement.
PSBs will develop a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy. This credit assessment model will leverage the digitally fetched and verifiable data available in the ecosystem and devise 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 statement said.
The digital footprints used by the model may include name and PAN authentication using NSDL, mobile, and email verification using OTP, API fetch of GST data through service providers, Bank Statement Analysis using account aggregator, ITR upload and verification, API-enabled commercial and consumer bureau fetch and due diligence using CICs, fraud checks, hunter checks through APIs, among others.
The benefits to MSMEs by use of this model include submission of applications from anywhere through online mode, reduced paperwork and branch visits, instant in-principle sanction through digital mode, seamless processing of credit proposals, end-to-end straight-through process (STP), reduced turnaround time (TAT), credit decision based on objective data/transactional behaviour and credit history, no physical collateral securities for loans covered under CGTMSE, among others, the statement added. (IANS)