AI-driven lending models can unlock USD 170 bn MSME credit gap in India: Govt

New Delhi [India], May 13 : Artificial Intelligence (AI)-powered lending models could help unlock an estimated USD 130-170 billion credit gap for India's MSMEs by using digital payment trails, GST filings and utility bill data instead of relying only on traditional credit scores, according to a PIB release on Wednesday.

The release said AI-based credit systems are reshaping India's lending ecosystem by expanding access to formal credit for "MSMEs, informal workers, and first-time borrowers" who often lack conventional credit histories.

"AI-powered solutions move beyond conventional credit scoring models and leverage alternative data such as digital payment transactions, GST filings, bank statements, and utility payments to assess creditworthiness," the release said.

According to the release, AI-driven credit models have "the potential to unlock an estimated credit gap of USD 130-170 billion in economic value", while also reducing dependence on informal lending channels among MSMEs.

The PIB backgrounder highlighted that India's expanding Digital Public Infrastructure (DPI), including Aadhaar, Jan Dhan accounts, UPI and the Unified Lending Interface (ULI), is creating the digital ecosystem necessary for AI-led financial inclusion.

For the millions of Indians without a CIBIL score, AI serves as the new gatekeeper to credit. By leveraging the Unified Lending Interface (ULI), AI models analyse "digital footprints" to assess risk.

The release noted that the Unified Lending Interface (ULI) enables access to multiple digital data sources, including "authentication services, land records, satellite service, and other financial and non-financial datasets" to support faster and more inclusive loan processing.

"As of December 12, 2025, 64 lenders (41 banks and 23 NBFCs) have been onboarded onto the platform," the release said, adding that lenders are already using "over 136 data services across 12 different loan journeys."

The backgrounder also underlined the role of the Account Aggregator (AA) framework in enabling consent-based financial data sharing for loan approvals and financial services.

"With over 2.6 billion accounts enabled to share data, a total of 252.9 million users have linked their accounts on the AA framework," the release said.

The PIB release said India's financial inclusion model is evolving from simply expanding banking access to building "an intelligent, AI-driven financial empowerment" ecosystem supported by advanced analytics and digital infrastructure.

The release added that AI-powered systems are also being deployed in financial security and fraud detection through initiatives such as RBI Innovation Hub's "MuleHunter.AI", which is designed to identify mule bank accounts linked to cybercrime and money laundering.

According to the backgrounder, India's broader AI-led financial inclusion push is aimed at making financial services "more responsive, secure, and future-ready" as the country advances towards its Viksit Bharat 2047 vision.

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