New MSME Credit Assessment Model for PSBs Expected by March 2025: Report
By: Admin
Date: September 03, 2024
Categories: MSME | News
Read Time: 4 Min
New MSME Credit Assessment Model by March 2025
Public sector banks (PSBs) in India will introduce a new credit assessment model for micro, small, and medium enterprises (MSMEs) by March 2025. According to Business Standard, this model focuses on using digital footprints for credit evaluation and is expected to launch by the end of the financial year 2024-25 (FY25).
Key Developments
Progress Update:
A PSB official stated that nearly half of the work on the new MSME credit assessment model is complete. This model represents a major shift from traditional methods, which rely on asset or turnover criteria. It aims to enhance credit access for MSMEs, including those without formal accounting systems.
Budget Proposal:
The development of this model supports the Union Budget FY25 proposal by Finance Minister Nirmala Sitharaman. The proposal emphasized the need for PSBs to build in-house capabilities for MSME credit assessment, reducing reliance on external evaluations.
Digital Footprint-Based Assessment:
The new model will evaluate MSMEs based on their digital footprints. This method promises a more accurate credit evaluation and will benefit MSMEs with strong digital transaction histories but weak traditional criteria.
Ongoing Work and Testing:
A senior official noted that the model is still in development. The team plans to conduct a thorough audit and acceptance test before the official launch. Although the exact launch date is not yet set, the focus remains on ensuring the model’s completeness and accuracy.
Conclusion
This initiative represents a significant step toward improving credit access for MSMEs, which are crucial to the Indian economy. By modernizing and digitizing the credit assessment process, PSBs aim to better serve this vital sector.
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