Notification/Circular No. –Press Information Release dated July 28, 2025
To streamline MSME lending and reduce dependency on physical documentation, the government introduced a Digital Credit Assessment Model, as announced in the Union Budget 2024–25. This model empowers Public Sector Banks (PSBs) to independently evaluate MSME loan applications using real-time digital data.
The new model replaces manual, paper-based underwriting with an automated digital process that uses a borrower’s digital footprints—such as PAN verification, GST data, ITRs, bank statements via Account Aggregators, and credit bureau scores. The system generates an objective credit score and applies bank-specific risk policies through Business Rule Engines.
The model supports both new and existing MSME borrowers and has significantly reduced turnaround time. Between April 1 and July 15, 2025, nearly one lakh MSME loans have been sanctioned using this model, with decisions delivered within a day in most cases.
Key benefits for MSMEs include:
The policy does not alter regulatory norms but modernises the credit appraisal process, making it quicker, more consistent, and MSME-friendly.
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