AI Unlocks $170B MSME Credit Gap in India: Govt Report

AI-powered lending models could unlock a significant credit gap for India's MSMEs. This gap is estimated to be between 130 and 170 billion US dollars. Here's how it works: these models use digital payment trails, GST filings, and utility bill data. This allows them to assess creditworthiness beyond traditional credit scores. This is crucial for MSMEs, informal workers, and first-time borrowers who often lack conventional credit histories. AI-driven credit systems are reshaping India's lending ecosystem by expanding access to formal credit. India's expanding Digital Public Infrastructure, including Aadhaar and UPI, creates the necessary digital environment. The Unified Lending Interface also plays a key role, enabling access to multiple digital data sources. As of December 12, 2025, 64 lenders, including 41 banks and 23 NBFCs, have joined this platform. Lenders are already using over 136 data services across 12 different loan journeys. The Account Aggregator framework also helps by enabling consent-based financial data sharing. Over 2.6 billion accounts are enabled to share data, and 252.9 million users have linked their accounts on this framework. AI-powered systems are also being used for financial security and fraud detection. This initiative aims to make financial services more responsive, secure, and future-ready.