Credit bureau CRIF has started offering such services.
“Many MSMEs find it challenging to access formal credit due to factors such as informal nature of business and lack of collateral,” said Sachin Seth, regional MD-India and South Asia at CRIF, a global fintech company that specialises in credit bureau and business information. said. “On the other hand, lenders find it difficult to assess credit risk of these enterprises as this demands a comprehensive assessment of the financial health of the business and the credit risk profile of the business owners.”
Credit gap—the difference between the demand for debt and supply of debt—for MSMEs is estimated at Rs 30 lakh crore, according to a report released by Sidbi last week.
“To bridge this gap, CRIF offers a unique solution by integrating the consumer and commercial credit information coupled with CRIF’s credit score and CIBR (CRIF India Business Rank). When risk assessment of self-employed or business is involved, lenders can leverage CRIF’s credit score combined with CIBR for superior risk separation,” Seth said.
Business loans are a part of CRIF’s commercial repository. CRIF uses this information to compute CIBR, which reflects the credit risk associated with the entity/business, while loans taken by individuals in their personal capacity are a part of its consumer repository and are used to compute CRIF credit score, which reflects the credit risk associated with the individual.CRIF is reckoned to be the only credit bureau to offer this integrated information to the lender.“While all credit bureaus have both consumer and commercial repositories, CRIF is the only credit bureau which provides integrated information along with a credit score and CIBR,” a CRIF executive said, adding that over 100 lenders have used this facility.
The government is also doing its bit to help improve credit access for MSMEs. It has launched a new Credit Assessment Model for micro and small enterprises based on scoring their digital footprints, which was announced in the July 2024 budget.
This credit assessment model leverages the digitally fetched and verifiable data available in the ecosystem and devise automated journeys for MSME loan appraisal using objective decisioning for all loan applications and model-based limit assessment for both existing-to-bank (ETB) and new-to-bank (NTB) MSME borrowers.
