Public Sector Banks (PSBs) have approved a substantial volume of credit for the Micro, Small and Medium Enterprises (MSME) sector, sanctioning over 3.96 lakh loan applications amounting to more than ₹52,300 crore (US$ 6.30 billion) between April 1 and December 31, 2025, according to data released by the Press Information Bureau (PIB).
The approvals were made under a newly introduced Credit Assessment Model, which uses digital credit underwriting programmes to streamline and modernise the loan evaluation process for MSMEs.
Digital Credit Assessment Enhancing Access
The new model leverages digital data and advanced analytics to assess the creditworthiness of MSMEs more efficiently. By minimising paperwork and simplifying documentation requirements, the system enables faster loan processing and approvals, particularly benefiting first-time borrowers and smaller enterprises that have traditionally struggled to access institutional finance.
This technology-driven approach is designed to widen the reach of formal credit and reduce barriers faced by MSMEs in securing timely funding.
Supporting MSME Growth and Financial Inclusion
The initiative reflects the Government of India’s continued focus on improving access to formal finance for MSMEs, a sector that plays a vital role in employment generation, innovation, and domestic value creation. By adopting digital underwriting tools, PSBs are able to shorten turnaround times while maintaining effective credit risk management.
The sanctioned loans are expected to help MSMEs meet working capital needs, fund business expansion, and invest in productive assets, thereby strengthening operational capacity across a wide range of industries.
A Step Towards Modernising MSME Financing
The shift towards digital credit assessment marks an important step in the modernisation of MSME lending in India. It aligns with broader policy objectives to increase credit flow to small businesses, encourage enterprise growth, and deepen financial inclusion by integrating more MSMEs into the formal financial system.
Summary
Between April and December 2025, Public Sector Banks sanctioned over 3.96 lakh MSME loan applications worth more than ₹52,300 crore under a new digital Credit Assessment Model. The initiative has simplified credit evaluation, improved turnaround times, and expanded access to formal finance, supporting MSME growth and strengthening financial inclusion across the sector.
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.