RBI Says AI Can Unlock Loans for the Invisible

RBI chief Sanjay Malhotra told banks that smart computers can give the green light to loans that people would normally be turned away from. He said the tech looks at things like cash flow, tax records and phone bills instead of just paper files. He said the computers learn from many different signals, not just the usual credit scores.

The governor explained that many people have no traditional credit story – they are new to borrowing, work gig jobs or run tiny shops. Because they lack paperwork, banks usually can't see them. First‑time borrowers, gig workers and small shops often have no paper trail, so they stay invisible to regular checks.

But the RBI warned banks to be careful. They must keep full lists of the AI they use, test it with tough challenges, and be ready to explain every decision. Banks must also set up ways to spot bias and to fix any mistakes before the system goes live.

The goal is to make credit more open and to grow the market. Early warning signs can help avoid bad loans. Overall, AI could bring many new borrowers into the financial system. By spotting risk early, lenders can counsel borrowers and keep defaults low, which helps the whole economy.