Anti-Diversion Undertaking refers to borrower undertaking that loan proceeds will be used only for the sanctioned purpose and not diverted to unrelated entities, personal use, speculative activity, or repayment of undisclosed liabilities. In MSME underwriting, it provides context for the borrower, facility, banking conduct or approval conditions and helps the credit officer connect operational data with credit judgement. For example, an undertaking or exception approval may allow the proposal to move forward, but it should clearly record the condition, authority and timeline. It matters because the term can affect how the proposal is documented, interpreted, approved and monitored after sanction. The common mistake is to read it in isolation; it should be checked against borrower documents, bank statements, financials and policy requirements.