Public sector banks (PSBs) have rolled out a Credit Assessment Model (CAM) based on digital footprints to streamline lending to micro, small and medium enterprises (MSMEs), marking a significant push towards technology-led credit delivery, the Ministry of Finance said in a release on Monday. The initiative, launched in 2025, aims to simplify loan appraisal and improve access to formal finance for small businesses through fully digital and data-driven processes.

Between April 1, 2025 and December 31, 2025, PSBs sanctioned more than 3.96 lakh MSME loan applications under digital credit underwriting programmes, with the total sanctioned amount exceeding ₹52,300 crore. The strong uptake highlights growing acceptance of digital lending frameworks among MSMEs and banks alike.

CAM framework

The leverages CAM framework digitally fetched and verifiable data available across the financial ecosystem to enable automated MSME loan appraisal. It uses objective, model-based decisioning for all applications and assesses credit limits for both Existing-to-Bank (ETB) and New-to-Bank (NTB) borrowers. By relying on standardised digital data rather than manual scrutiny, the model reduces subjectivity and enhances consistency in credit decisions.

Under the system, digital footprints are used for multiple stages of due diligence, including Know Your Customer (KYC) authentication, mobile and email verification, analysis of Goods and Services Tax (GST) data, bank statement evaluation through the Account Aggregator framework, income tax return (ITR) verification, and checks with Credit Information Companies (CICs). Fraud checks and other risk assessments are also integrated into the digital workflow.

For MSMEs, the adoption of CAM-based lending offers several operational advantages. Loan applications can be submitted online from any location, significantly reducing paperwork and the need for branch visits.

How CAM works

Eligible borrowers receive instant in-principle sanctions through digital channels, enabling faster and more transparent credit decisions. The process is designed as an end-to-end straight-through journey, helping reduce turnaround time and improve overall customer experience. The framework also supports integration with credit guarantee schemes such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

A key feature of the initiative is application sourcing through the Jan Samarth Portal for loans within bank-defined thresholds. Due diligence is conducted through APIs that fetch data directly from source systems, enabling quicker decision-making and seamless linkage with credit guarantee portals.

Overall, the digital credit assessment model is expected to strengthen MSME access to timely finance while improving efficiency, transparency and risk management across the public sector banking system.

Credit Assessment Model

PSBs sanction nearly 4 lakh MSME loans worth ₹52,300 crore under new Credit Assessment Model