Public sector banks have sanctioned 0.396 million MSME loan applications worth more than Rs 523 billion between 1 April and 31 December 2025 under digital credit underwriting programmes, the Ministry of Finance said on Monday.

The Public Sector Banks introduced the Credit Assessment Model (CAM) in 2025, using digital footprints to assess creditworthiness of Micro, Small and Medium Enterprises. The model relies on digitally fetched and verifiable data to enable automated loan appraisal through objective decision-making and model-based limit assessment for both existing-to-bank and new-to-bank borrowers.

According to the ministry, CAM integrates multiple data points, including KYC authentication, mobile and email verification, GST data analysis, bank statement scrutiny through account aggregators, income tax return verification, and due diligence using credit information companies’ data, along with fraud checks.

The digital underwriting framework offers several benefits to MSMEs, including the ability to submit loan applications online from any location, reduced paperwork and fewer branch visits, instant in-principle approvals, seamless processing of credit proposals and faster turnaround times. Credit decisions are based on objective transactional behaviour and credit history, with integration of applicable credit guarantee schemes.

The ministry said the programme has helped improve access to formal credit for MSMEs while enhancing efficiency and transparency in loan processing across public sector banks.