On March 6, Union Finance Minister Nirmala Sitharaman launched the New Credit Assessment Model for MSMEs at a post-Budget interaction in Visakhapatnam. This initiative, announced in the Union Budget 2024-25, marks a strategic shift for public sector banks (PSBs):
- In-House Capability:
- PSBs will now develop their own ability to assess MSME creditworthiness, reducing reliance on external agencies.
- Digital Footprints:
- The new model leverages digitally fetched, verifiable data from the ecosystem.
- It uses digital footprints of MSMEs to generate credit scores.
- Automated Loan Appraisal:
- The system will facilitate automated loan appraisal processes using objective decisioning.
- It will cover both Existing to Bank (ETB) and New to Bank (NTB) MSME borrowers with model-based limit assessments.
(Source: Business Standard)
