New credit assessment model for MSMEs under way

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Banks have begun talks with banking tech solution major Nucleus Software Exports Ltd. to build a new credit assessment model for Micro, Small and Medium Enterprises (MSMEs) as proposed in the recent budget.

Finance and Corporate Affairs Minister Nirmala Sitharaman had, in her recent Union Budget speech, said that public sector banks will build their in-house capability to assess MSMEs for credit instead of relying on external assessment. They will also take a lead in developing or getting developed a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy, she had said.

“In line with the Budget announcement, we are now in talks with banks to build this credit assessment model for MSMEs. We are engaged with both public sector banks such as SBI and private banks for this purpose,” Vishnu R Dusad, Managing Director, Nucleus Software Exports Ltd. told businessline here. 

Nucleus Software, a digital transformation enabler for banks, has been in existence for over three decades with tech products around lending as well as transaction, banking besides financial inclusion.

Once the new credit assessment model for MSMEs is firmed up, it will most likely get integrated with the company’s existing tech-focused lending product already being used by these banks, said Dusad.

The new MSME credit assessment model, based on digital footprints, is expected to be a significant improvement from the traditional assessment of credit eligibility based only on asset or turnover criteria.

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Asked about the short to medium term strategic focus areas for Nucleus Software, Dusad said that the company will focus energies on “plumbing deep” in its international operations and go for growth in the six subsidiaries that are already in existence abroad.

“We will be focusing very sharply on Australia, Japan, US and the Middle East. Latin America is not something we will focus on right away,” he said.

Currently, Nucleus Software secures about 45 percent of its revenues from international operations. “Our aspiration is to take this number to 70 percent. It could happen in next three years,” Dusad said.