Govt to roll out credit rating for rural borrowers in six months
Subscribe to enjoy similar stories. New Delhi: The Union government plans to launch a Grameen Credit Score system within six months, mirroring the MSME credit framework, to boost formal lending to farmers, self-employed individuals, and self-help groups (SHGs), two people familiar with the matter toldMint.
The government is working with public-sector banks and the Indian Banks’ Association (IBA) to develop the framework. It will assess rural borrowers' creditworthiness based on digital transaction data, government subsidy receipts, and Unified Payments Interface (UPI) activity, the people mentioned above said on condition of anonymity.
Like the Micro, Small and Medium Enterprises MSME model, the rural credit score will incorporate alternative financial indicators, such as utility bill payments, property ownership, and vehicle usage, the first person mentioned above said. “The two models—the MSME credit assessment and the Grameen Credit Score—are being developed in parallel," the person said.
“The MSME framework will be implemented first, while the rural credit score should be ready for deployment in the latter half of 2025." The Budget 2024-25, presented by finance minister Nirmala Sitharaman in July last year, proposed that banks develop a new credit assessment model based on the scoring of digital footprints of MSMEs in the economy. This was intended to improve upon the traditional assessment of credit eligibility which primarily relies on asset and turnover criteria.
Banks are expected to come out with a new framework and credit assessment model for MSME early next fiscal year. Finance minister Nirmala Sitharaman has underscored the need for an inclusive credit assessment system in her FY2025-26 budget speech,
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