PSBs Sanction Rs 28,724 Crore To MSMEs Under Digital Credit Model

New Delhi, Dec 27 (KNN) Public sector banks (PSBs) have sanctioned nearly Rs 28,724 crore in loans to MSMEs under the government’s new digital footprint–based credit assessment model during the April–October period of FY26, reflecting early traction of the technology‑driven lending initiative.

Digital Model Boosts MSME Credit Access 
PSBs processed 560,655 MSME loan applications in seven months, approving 261,281. Of the sanctioned amount, Rs 23,541 crore has been disbursed, with 188,999 applications still pending, showing sustained demand, reported BS.

Under the digital assessment model, banks use verifiable digital data, GST filings, IT returns, bank statements via account aggregators, to replace paperwork with faster, transparent, data-driven loan evaluations.

Rejection Rates and Bank Performance
The overall rejection rate across participating banks was about 20 percent, varying with borrower credit profiles and availability of digital data. 

Some banks such as Bank of Maharashtra reported lower rejection rates, while others including Bank of India and UCO Bank saw higher rejection ratios. Officials said the rejection levels reflect objective risk assessment driven by digital data rather than discretionary lending decisions.

Benefits for MSMEs
Officials said the digital model allows online applications, less paperwork, instant in-principle sanctions, end-to-end processing, faster turnaround, and credit decisions based on verifiable transactions rather than subjective criteria.

The system also helps identify new‑to‑banks and new‑to‑credit borrowers, expanding financial inclusion for small enterprises with limited formal credit history.

(KNN Bureau)