The Union government is preparing to introduce a Grameen Credit Score system within the next six months to improve access to formal credit for farmers, self-employed individuals, and self-help groups (SHGs). This system will function similarly to the credit rating framework used for Micro, Small, and Medium Enterprises (MSMEs).
Framework Development in Collaboration with Banks
According to sources familiar with the matter, the government is working closely with public-sector banks and the Indian Banks’ Association (IBA) to create the credit rating framework. The system will assess the creditworthiness of rural borrowers based on their digital transaction history, government subsidy receipts, and Unified Payments Interface (UPI) activity.
The Grameen Credit Score will also take into account alternative financial indicators, such as utility bill payments, property ownership, and vehicle usage, similar to the MSME credit assessment model.
Parallel Development with MSME Credit Framework
A source revealed that both the MSME credit assessment model and the Grameen Credit Score system are being developed simultaneously. However, the MSME framework will be implemented first, while the rural credit rating system is expected to be rolled out in the latter half of 2025.
This initiative is expected to enhance financial inclusion in rural areas by making it easier for small borrowers to access loans based on their financial behavior rather than relying solely on traditional credit history.
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