India’s banks have more data than ever, yet fewer new businesses are entering formal credit. Their share fell to 42% in 2025-26 from 52% in 2022-23
GST filings, cash flows, utility payments, ecommerce records and other digital signals can reveal creditworthiness beyond traditional collateral and credit histories
Alternative data and AI can help lenders assess viable small businesses and other credit-invisible borrowers who lack formal financial histories
Digital lending models are already using transaction data to assess repayment capacity
SBI’s e-Smart SME project enabled collateral-free working-capital loans for ecommerce sellers
Data and AI should complement, not replace, human judgement. Banks need strong governance to understand model risks, limits and when human intervention is necessary
Alternative data must be consent-based and monitored for bias, reliability and privacy
Technology succeeds only when it helps banks reach viable borrowers without creating new exclusions