Government launches credit assessment model to boost MSME lending.

 



1. What is the new model — Credit Assessment Model (CAM)

The government has introduced a new digital-first Credit Assessment Model (CAM) aimed at streamlining loan appraisal for small businesses — particularly Micro, Small and Medium Enterprises (MSMEs).CAM is designed to provide automated, data-driven credit evaluation that relies on digitally verifiable data rather than traditional subjective or collateral-based assessments. 

2. How CAM works — Data-driven, digital footprints and automation

The assessment uses a variety of digital footprints/data sources — such as PAN authentication, GST data, bank statements (via account-aggregator), ITR uploads, bureau credit data, mobile/email verification, and other API-enabled verifications. The process is automated: loan applications can be submitted online, without heavy paperwork or repeated branch visits. For both existing clients of a bank (“Existing-to-Bank” / ETB) and new clients (“New-to-Bank” / NTB), the model provides objective, uniform decisioning and “model-based limit assessment.” 

3. Why it matters — Benefits for MSMEs and lenders

For MSMEs: reduces paperwork, branch visits; speeds up sanctioning; enables in-principle sanction digitally. Helps especially those MSMEs which may not have formal accounting systems or traditional collateral — with evaluation based on digital footprints and transactional history rather than just assets or turnover. For lenders (especially public sector banks — PSBs): provides an objective, standardized, scalable, automated risk-assessment framework, reducing subjectivity, fraudulent documentation and manual workload.

4. Implementation & Early Results

The model was formally launched on March 6, 2025 by Nirmala Sitharaman (Finance Minister) and Pankaj Chaudhary (Minister of State, Finance). Between April 1 and July 15, 2025, public sector banks sanctioned 98,995 MSME loan applications using the new model — reflecting quick uptake and demonstrating that the digital-credit mechanism is operational. Under the new model, loan decisions are reportedly being made within up to one day — a significant reduction in turn-around time compared to earlier, manual methods.

5. Wider Context — Link to digital payments push and financial inclusion

Alongside CAM, the government also continues to promote digital payment infrastructure (e.g. incentives for debit cards, UPI, POS/QR deployment) — improving ease of doing business for MSMEs and integrating them into the formal digital economy. This reflects a broader commitment to inclusive financial access — making credit more accessible, transparent, and affordable for small enterprises, in turn supporting economic growth and MSME sector expansion.

#MSME
#CreditAssessmentModel
#DigitalLending
#FinancialInclusion
#MSMELoans
#GovtInitiative
#DigitalIndia
#FinTech
#EaseOfDoingBusiness
#PSBBanking
#DigitalCredit 
#EconomicGrowth 
#SmallBusinessSupport
#IndiaEconomy
#AatmaNirbharBharat


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