Liquidity Assessment Framework evaluates whether the borrower has enough near-term cash and inflows to meet operating expenses and debt obligations. In MSME underwriting, liquidity is often more important than accounting profit because repayments happen from actual cash movement. The framework may review bank balances, account turnover, receivable ageing, inventory holding, supplier credit, utilisation of limits, overdue payments, and upcoming obligations. For example, a profitable borrower with slow collections and fully utilised limits may still struggle to pay EMIs on time. This matters because liquidity stress is an early sign of repayment risk. The common caution is to assess liquidity dynamically using bank statements and working-capital cycle, not only year-end balance sheet numbers.