What is DSCR, and why is it important for MSME loans?

Debt Service Coverage Ratio (DSCR) measures a company's cash flow compared to its debt obligations. Banks use DSCR to assess if an MSME can generate enough cash accruals to repay the principal and interest of the loan.

What DSCR ratio is preferred by Indian banks?

Indian banks and financial institutions generally prefer a DSCR ratio of 1.25x to 1.5x. A ratio below 1.0x indicates the business cannot cover its debt obligations from operations alone.

MSME Loan Eligibility (DSCR)FY 2026-27

Evaluate your Debt Service Coverage Ratio (DSCR) against standard Indian bank thresholds (> 1.25x).

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Last verified May 2026

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