Summary of this article
RBI urges banks to use AI for wider credit access.
Alternative data can help assess credit-invisible borrowers.
Banks need safeguards while expanding AI-based financial services.
Deputy Governor of the Reserve Bank of India (RBI) Shirish Chandra Murmu has urged banks to use artificial intelligence (AI) and alternative data to bring credit invisible borrowers into the formal credit system, as the share of fresh businesses entering formal credit has fallen to 42 per cent in 2025-26 from 52 per cent in 2022-23.
Outstanding commercial credit stood at Rs 65.80 trillion in 2025-26, according to data cited by Murmu.
AI Can Help Banks Reach New Customers
Banks have gained access to richer data and stronger analytical capabilities, but this has not translated into greater reach among borrowers who have not previously been served by the formal credit system, Murmu said.
Murmu has urged banks to use alternative data and AI to bring credit-invisible borrowers into the formal credit system.
Notably, traditional lending has relied on collateral, financial statements and credit bureau history. Banks have now gained access to cash flows, Goods and Services Tax (GST) filings, utility payments, e-commerce records, mobile usage, agricultural data, and geospatial information.
Murmu further said that a lack of reliable information about a borrower should not automatically be treated as negative information. He added that AI can help lenders interpret information that does not arrive in conventional formats. This can include audio recordings describing a borrower’s loan purpose and business revenue, images of crops, inventory or physical assets, and weather patterns linked to seasonal cash flows.
Such information has to be collected with consent, tested for reliability and bias, and used alongside human judgement, he added.
Credit Growth Needs Better Outreach
Murmu also pointed out that the contribution of banking to economic growth should not be measured only through aggregate credit growth or the size of bank balance sheets. It should also be analysed through who receives finance, whether customer expectations are met, and how banks support wider economic activity.
He highlighted the need to deepen digital financial inclusion while ensuring that people requiring assistance or alternative access channels are not left behind.
AI Can Also Bring Newer Risks For Banks
Murmu said that AI can help banks recognise capability across differences in language, location, livelihood, gender and channel, and use such information prudently to make financial services more accessible.
At the same time, banks have faced risks from greater reliance on common data sources, models, technology providers, and infrastructure. A single error or disruption can affect multiple institutions together.
Murmu also called for effective challenge mechanisms, limits on undue concentration, and credible alternatives. He also emphasised that banks need human judgement and alternative arrangements when AI systems fail or behave unexpectedly.
