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Kesineni for alternative credit assessment model for MSMEs
Vijayawada: Vijayawada MP Kesineni Sivanath alias Chinni said the MSME entrepreneurs are suffering because they are not able to get loans from the...
Vijayawada: Vijayawada MP Kesineni Sivanath alias Chinni said the MSME entrepreneurs are suffering because they are not able to get loans from the banks due to low SIBIL score which may be caused by late payments.
He said the small and medium enterprises may not get payments in the stipulated time due to multiple reasons and there is a scope of decreasing SIBIL score resulting in the failure to get the loans from the banks.
The Vijayawada MP has raised this important issue in the Lok Sabha in this budget session held in the capital on Tuesday.
The MP said there is an urgent need to explore alternative credit assessment mechanisms, such as income-based evaluations to accurately reflect the financial health of MSMEs. This need was recognized in the Union Budget 2024-25, where the government announced that Public Sector Banks will develop a new credit assessment model based on the digital footprints of MSMEs, reducing reliance on external assessments.
The concerned Union Minister will reply to the question soon.
He raised the subject under Rule 377. The MP has urged the government to provide details regarding the steps taken to develop this model, offering much-needed relief to the MSME sector.
The MP said Vijayawada’s MSME sector, particularly in Autonagar, spread over 300 acres, having more than 1 lakh small and medium enterprises with its automobile manufacturing units, is a key contributor to the local economy. He said the MSME sector faces challenges in accessing formal credit and one such challenge is CIBIL score, which depends on borrower’s payment and credit history for calculating loan eligibility.
He said many MSMEs lack formal credit histories or established records, making it difficult for them to secure loans. Furthermore, the issue of delayed payments from buyers to MSMEs is rampant, worsening liquidity issues in this sector, leading to repayment difficulties and consequently, a poor CIBIL score. This creates a vicious cycle, where MSMEs end up paying higher interest rates, further straining their financial stability.
