Nandan Nilekani, the architect of Aadhar, has batted in favor of AI-based credit disbursal systems, especially for small and medium sized businesses. Although India is currently struggling with issues like non-performing assets (NPAs), non-banking financial company NPAs, Nilekani has placed his bets on an entirely tech and data-based solution emerging from the current challenges.
An artificial intelligence (AI) – driven system will help in making credit decisions that will be based on business flows rather than being asset-based. The new technology is going to prove beneficial for the newcomers because they may not possess assets. A recent report published by Reserve Bank of India said non-bank lenders witnessed stress in their asset quality in the first half of the current fiscal, with gross NPA ration increasing to 6.3% in September 2019 from 6.1 percent in March.
Artificial Intelligence can assess good and bad credit risk, which can help to tweak the rate at which loans are offered. Today, big businesses get cheap credit whereas small ones get expensive credit through money lenders. AI will ensure a level playing field in terms of loan disbursement.
Asked about his advice for entrepreneurs, Nandan Nilekani said they should be aiming to achieve profitability fast. The Infosys co-founder added that internet businesses globally had turned profitable after a few years of losses, and therefore getting to that path should be kept in mind.