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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Quick Summary: MSME Loan Eligibility (DSCR)

Debt Service Coverage Ratio (DSCR) is a key financial metric used by banks to assess the creditworthiness of an MSME. A DSCR > 1.25x generally indicates that the business generates sufficient cash flow to comfortably cover its interest and principal repayments. This tool helps you calculate your DSCR based on your P&L and existing debt.

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Regulatory Disclaimer · FY 2026-27

Last verified May 2026

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