India’s central bank wants AI to approve loans that humans would reject
AI AND ML
Regulator hopes for greater financial inclusion, without extra risk or blaming models for bad decisions
The governor of India’s Reserve Bank wants the nation’s financial institutions to use AI to approve loans that human assessors would likely reject.
In a speech delivered yesterday at the FIBAC conference in Mumbai, Sanjay Malhotra said the regulator “sees AI as a capability to be responsibly harnessed and not merely as a risk to be contained,” then offered several reasons to support that statement.
The first reason is that banks currently find it hard to justify loans to first-time borrowers, gig workers, or small businesses that don’t keep formal books.
“AI models, trained on alternative data – cash flows, GST filings, utility payments, digital footprints – can extend the frontier of ‘bankable’ India considerably further than manual underwriting ever could, at a fraction of the marginal cost per loan,” Malhotra argued....
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