India's Credit Growth Needs AI to Fix Slow Underwriting

BANKINGFINANCE

Overview

India's credit market, valued at over ₹121 lakh crore, faces slow growth due to outdated underwriting methods that take underwriters up to 50% of their time for data collection. Despite digital tools, core loan decisions remain slow. AI is becoming vital, not just to save time, but to speed up loan approvals, cut costs, manage risk better, and expand financial access, while also addressing concerns about bias and data privacy.

Banks Accelerate AI for Credit Growth

Experts believe AI adoption in India's financial sector is moving from trial stages to full company-wide use, ushering in what they call an "AI execution decade" for banks. With credit demand expected to grow, supported by favorable economic conditions and government programs like expanded credit guarantees for small and medium businesses (MSMEs), AI-driven underwriting is seen as essential for continued expansion. Successfully using AI should boost efficiency, improve risk management, and widen credit access, helping lenders stand out. However, banks must balance AI innovation with strong ethical rules, transparent practices, and human oversight to manage risks and support fair financial growth.

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