SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Ministry of Finance | Reserve Bank of India (RBI)
Public Sector Banks (PSBs) have achieved a significant milestone in digital lending, sanctioning over 3.96 lakh MSME loan applications totaling more than ₹52,300 crore between April 1 and December 31, 2025. This surge is driven by a new Credit Assessment Model (CAM) launched in 2025, which utilizes digital footprints to revolutionize financing for Micro, Small & Medium Enterprises (MSMEs). By leveraging the Jan Samarth Portal, the model automates the appraisal process, providing objective decision-making and model-based limit assessments for both existing and new-to-bank borrowers.
Key Features of Digital Footprint-Based Lending
Instant In-Principle Sanctions: Automated systems provide immediate preliminary approval for MSME loans based on the applicant’s digital data.
Automated Data Fetching: The model retrieves verifiable data directly from the digital ecosystem, including GST data, ITR verifications, and bank statements via account aggregators.
Comprehensive Due Diligence: The system integrates KYC authentication, mobile/email verification, and fraud checks with data from Credit Information Companies (CICs).
Seamless Processing: Proposals undergo end-to-end Straight Through Processing (STP), ensuring a paperless and seamless journey from application to sanction.
Integration of Guarantees: The model is integrated with credit guarantee schemes like CGTMSE, providing additional security for lenders.
Direct Benefits for MSMEs
Reduced Turnaround Time (TAT): The shift to objective, transactional behavior-based data significantly speeds up the credit decision process.
Enhanced Accessibility: MSMEs can submit applications from anywhere via online modes, eliminating the need for physical branch visits.
Minimal Paperwork: The reliance on digitally fetched footprints drastically reduces the documentation burden on small business owners.
What are ‘Digital Footprints’ in the context of MSME lending and why are they replacing traditional collateral? Digital footprints are the electronic records of a business’s transactions and activities, such as GST filings, Income Tax Returns (ITR), and digitized bank statements. They are replacing traditional physical collateral because they provide a more accurate, real-time picture of a business’s actual cash flow and transactional behavior. For many MSMEs that lack significant fixed assets like land or buildings, these digital footprints act as “information collateral,” allowing banks to assess creditworthiness based on their economic vitality rather than their balance sheet assets. This shifts the lending paradigm from “collateral-based” to “cash-flow-based,” democratizing access to capital for small businesses.
Policy Relevance
The success of digital footprint-based lending underscores India’s leadership in leveraging Digital Public Infrastructure (DPI) to drive financial inclusion and industrial growth.
Strategic Impact:
Formalizing the MSME Sector: By incentivizing the use of GST and ITR data for loans, the policy encourages small businesses to move into the formal economy.
Strengthening ‘Viksit Bharat’ Goals: Rapid credit deployment to nearly 4 lakh enterprises in nine months directly supports the goal of making India a global manufacturing hub.
Reducing Lending Costs: Automation and reduced paperwork lower the operational costs for PSBs, potentially leading to more competitive interest rates for MSMEs.
Resilience Against Fraud: Integrated digital verifications and CIC data analysis create a more robust and secure lending environment, reducing non-performing assets (NPAs).
Relevant Question for Policy Stakeholders: How can the Jan Samarth Portal be integrated with state-level procurement platforms to allow MSMEs to use 'Pending Government Invoices' as real-time digital footprints for securing immediate working capital?
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