AKASH ENTERPRISES: A CASE ON CREDIT RISK SCORING OF SMALL VALUE LOANS

It was 10 am on January 22, 2024, when Mr. Ranjeet, the head of Commercial Bank's Shivaji Nagar Branch in Pune, was pondering over the business targets for the branch. He was concerned about having to achieve all the targets before the end of March. One of the targets was lending to MSMEs, particularly the micro enterprises governed by the Pradhan Mantri MUDRA Yojana (PMMY). Just then Ms. Soundarya, a young and enthusiastic credit officer of the branch entered his cabin with the loan application received from Akash Enterprises (AE), a micro enterprise. AE was a sole proprietorship firm started just recently and the promoter of the firm needed a term loan for purchase of a machinery. Ranjeet briefed Soundarya that the branch was short of achieving the target for MSME loans and advised her to complete the credit appraisal of the firm and put up the proposal with her recommendation.