Public Sector Banks (PSBs) are gearing up to introduce a new credit risk assessment model tailored for micro, small, and medium enterprises (MSMEs) seeking loans ranging from ₹25 lakh to ₹5 crore. The initiative, reported by Business Standard, aims to streamline loan approvals and offer better support to MSMEs.
Launch Schedule:
- November 25, 2024:
- Bank of India
- Punjab & Sind Bank
- Canara Bank
- Indian Bank
- November 30, 2024:
- Bank of Baroda (BoB)
- Union Bank of India
- UCO Bank
- Punjab National Bank (PNB)
- Two additional PSBs.
Features of the New Model:
- Digital Footprint-Based Assessment:
Unlike traditional models that depend on assets or turnover, this model will use digital data to evaluate credit risk, offering a more accurate and inclusive approach. - Focus on MSMEs Without Formal Accounting Systems:
This model will cater to enterprises that lack formal financial documentation, ensuring wider accessibility. - Loan Coverage:
- Indian Bank and SBI: Loans up to ₹5 crore.
- Bank of Baroda, Canara Bank, and Bank of Maharashtra: Loans up to ₹25 lakh.
- Bank of India: Loans up to ₹1 crore.
Economic Impact:
- MSMEs contribute over 30% of India’s GDP and nearly 50% of its exports, playing a pivotal role in economic growth.
Related Initiatives:
- Credit Guarantee Scheme:
- Finance Minister Nirmala Sitharaman announced an ₹100 crore credit guarantee scheme to support MSMEs in distress.
- The scheme, set for Cabinet approval, will be implemented through the MSME Ministry and banks.
