AI can do to lending, what UPI did to payments: RBI governor Sanjay Malhotra
MUMBAI: RBI governor Sanjay Malhotra said AI could do to lending decisions what UPI did to payments and urged banks not to sit on the sidelines as India is well-placed to adopt the technology because of its public digital infrastructure and regulatory supervision. His comments at FIBAC 2026 came at a time when the share of credit to GDP remains modest even as bank books are at their healthiest.Malhotra said RBI is putting in place a Digital Payments Intelligence Platform that will augment India’s digital infrastructure, including Aadhaar, UPI, DigiLocker, ONDC, the Unified Lending Interface and Account Aggregator, giving banks a stronger base to use AI across lending and other financial services.“We in India stand at a unique vantage point to leverage AI. We have the most advanced public digital infrastructure, whether it is Aadhaar, the UPI, DigiLocker, ONDC, we are trying to build and improve and expand the Unified Lending Interface, the Account Aggregator,” he said. Citing a BCG report, Malhotra said there is scope to bring down the operational cost-to-income ratio from 47-49% with the help of AI.AI could widen the pool of borrowers by allowing banks to use data beyond conventional financial histories. According to Malhotra, “AI models on alternative data, which we have a lot now—cash flows, GST filings, utility payment bills, digital platforms—they can all extend the frontier of bankable India considerably.” This could be particularly relevant for new-to-credit borrowers, gig workers and underserved sections that lack formal financial records. “Traditional underwriting relies on financial history, precisely the data that is thin or absent for new-to-credit borrowers, for the gig workers, or those underserved sections of our society because they do not have formal books,” he said.At the same time, Malhotra said the explainability of decisions and human accountability were prerequisites.
