Indian Economy News

Over 3.96 Lakh MSME loan applications amounting to more than US$ 6.30 billion Sanctioned by PSBs under the new Credit Assessment Model

Public Sector Banks (PSBs) have sanctioned over 3.96 lakh loan applications from Micro, Small and Medium Enterprises (MSMEs), with total sanctioned credit exceeding Rs. 52,300 crore (US$ 6.30 billion) between 1 April and 31 December 2025, according to a release by the Press Information Bureau. The loans were approved under a new Credit Assessment Model that leverages digital credit underwriting programmes to simplify the credit evaluation process for MSMEs. The model utilises digital data and analytics to assess creditworthiness more efficiently, significantly reducing documentation requirements and enabling faster loan approvals for eligible enterprises. This digitalised approach is aimed at expanding access to formal credit for a wider segment of MSMEs, including first-time borrowers and smaller units that have traditionally faced challenges in securing institutional financing.
The initiative underscores the Government of India’s focus on strengthening access to formal credit for Micro, Small and Medium Enterprises (MSMEs), which play a critical role in employment generation, innovation, and domestic value addition. By leveraging technology in credit assessment, Public Sector Banks (PSBs) are improving turnaround times while managing credit risk more effectively, thereby expanding financial inclusion within the MSME sector. The sanctioned loans are expected to support working capital requirements, business expansion, and investment in productive assets, enhancing the operational capabilities of MSMEs across industries. The adoption of digital underwriting mechanisms represents an important step towards modernising MSME financing, in line with broader policy efforts to increase credit flow, encourage enterprise growth, and deepen the reach of the formal financial system to smaller businesses across India.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.