Artificial Intelligence in Credit Scoring and Loan Underwriting: An Indian Perspective

Artificial Intelligence (AI) is transforming credit scoring and loan underwriting in India. Traditional methods mainly rely on credit history and income data, which can restrict credit access for many individuals and small businesses. AI systems leverage advanced data analysis and machine learning to assess borrower risk more accurately and rapidly, utilizing both conventional and alternative data sources. This article discusses how AI-driven credit scoring and loan underwriting are implemented in India's financial sector. It emphasizes benefits like faster loan approvals, better risk assessment, and greater financial inclusion. It also covers challenges such as data privacy, algorithmic bias, lack of transparency, and regulatory issues. Overall, the findings suggest that AI has significant potential to enhance lending efficiency and inclusion in India, provided it is used responsibly and complies with regulatory standards.

Artificial Intelligence, Credit Scoring, Loan Underwriting, Financial Inclusion, India

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