PSBs Approve Rs 52,300 Crore in MSME Loans Using New Credit Assessment Model

The Ministry of Finance recently shared a press release regarding MSME loan application approval under the new Credit Assessment Model.

In 2025, the Public Sector Banks (PSBs) launched the Credit Assessment Model (CAM) to decide loans for Micro, Small & Medium Enterprises (MSMEs) by looking at their digital footprints.

Between April 1 and December 31, 2025, public sector banks approved nearly 3.96 lakh loans for small and medium businesses using digital systems and sanctioned over Rs 52,300 crore.

This credit assessment model uses digitally sourced and verifiable data from the ecosystem to create automated workflows for evaluating MSME loan applications. It enables objective decision-making for all loan requests and provides model-driven limit recommendations for both Existing-to-Bank (ETB) and New-to-Bank (NTB) MSME borrowers.

Digital footprints are used to verify KYC details, check mobile numbers and email IDs, analyse GST data, review bank statements through account aggregators, and verify income tax returns (ITR) using Credit Information Companies (CICs) data.

The use of such digital credit models benefits MSMEs in several ways. Applications can be submitted online from anywhere, reducing paperwork and the need for branch visits. Businesses can receive instant in-principle approvals through digital channels, with smoother and faster processing of credit proposals. The entire process is handled end-to-end through straight-through processing (STP), which significantly reduces turnaround time (TAT). Credit decisions are based on objective data such as transaction behaviour and credit history, improving transparency and consistency. These models also enable seamless integration of credit guarantee schemes like CGTMSE.