AI can make MSME lending more contextual, inclusive and scalable: UGRO Capital
Small and medium businesses rarely fit neatly into the structured financial profiles on which conventional credit models depend. Their cash flows fluctuate with seasonality, receivables are often delayed, inventory cycles vary and market demand can change rapidly. At the same time, the information needed to understand these businesses can sit across spreadsheets, invoices, GST filings, handwritten ledgers and other informal records.
For lenders, this creates a fundamental challenge: a business can appear risky to a conventional credit model simply because its information is incomplete or does not conform to a standardised format. According to Rahul Sekhar, Chief Technology and Product Officer, UGRO Capital, artificial intelligence can help address this challenge, but only if MSME lending is approached differently from consumer or retail credit.
“MSME lending is therefore not purely a statistical exercise; it is fundamentally contextual,” Sekhar says.
Beyond structured financial data
Conventional AI-led underwriting works most effectively when...
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