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For most MSMEs in India, credit does not fail at repayment.It fails much earlier at the decision stage. By the time a loan is disbursed, the outcome is often already predetermined. The real success or failure of MSME lending is shaped upstream, when underwriters try to answer a deceptively simple question: Is this business creditworthy?  For new-to-credit MSMEs, this question is rarely answered with confidence. Instead, it is approximated through incomplete signals, rigid ru

Credit bureaus were built to answer a specific question: How has this borrower behaved with credit in the past? For many MSMEs in India, that question has no meaningful answer. This is not a failure of credit bureaus themselves. Bureau scores work remarkably well for salaried individuals and established firms with long borrowing histories. The problem arises when the same logic is applied to businesses that are new to formal credit systems. For these MSMEs, the absence of his

In theory, the best credit model is the most accurate one.In practice, the model that survives inside a lending institution is the one that can be explained. This tension between accuracy and explainability sits at the heart of modern credit decision-making. As data availability increases and modeling techniques become more sophisticated, lenders face a subtle but critical question: Is a more accurate decision always a better decision if no one can fully explain it? In theor