The Reserve Bank of India is encouraging lenders to harness AI for broader credit approval, emphasising human oversight and responsible deployment amid evolving digital finance standards.
India’s central bank is pushing lenders to use artificial intelligence to widen access to credit, with Governor Sanjay Malhotra saying models trained on alternative data could approve borrowers whom conventional underwriting would overlook. According to TechRadar Pro, the Reserve Bank of India chief argued that information such as cash flow, goods and services tax filings, utility payments and digital activity could help banks assess first-time borrowers, gig workers and small firms without formal financial records.
Malhotra paired that optimism with a warning that AI should support, not replace, human judgment. Business Standard reported in July that he urged banks to use advanced technology to cut costs, improve efficiency and customer service, while maintaining strong cyber security, internal controls and safeguards against fraud and misuse of data. In his latest comments, he also stressed the need for complete AI inventories, red-teaming before deployment and systems that can explain why a loan or fraud alert was triggered.
That emphasis on oversight reflects the central bank’s wider approach to digital finance. The Economic Times reported in October 2025 that Malhotra had unveiled the idea of a Unified Lending Interface to help lenders build alternative credit models around data, while the RBI has also been working on standards for digital customer onboarding. Separately, LiveMint reported in January that he called for banks and other regulated entities to share analytics and AI tools to identify mule accounts and suspicious transactions earlier.
The RBI’s message is that the accountability for automated decisions must remain human. Malhotra said banks would still be answerable to customers, auditors and the regulator when AI-driven decisions go wrong, even as he argued that better models could identify borrowers at risk of default early enough to offer help rather than simply pursue recovery. The governor cast trust, rather than speed, as the real prize in the AI era.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
