The finance ministry plans to introduce a digital credit assessment model for Micro, Small, and Medium Enterprises (MSMEs) in December. This model aims to make it easier for smaller businesses to access loans, as they are often overlooked due to a lack of formal documentation.

The initiative, which was announced in the Budget 2024, will replace traditional credit assessment methods with a data-driven approach that uses the digital footprints of MSMEs to evaluate their creditworthiness. The new framework is currently in the pilot phase and is expected to be unveiled by finance minister Nirmala Sitharaman. By moving away from relying on external ratings, the model aims to reduce costs for MSMEs and improve their ability to secure financing.

This development is a significant step towards supporting the growth and sustainability of smaller enterprises in the economy.