AI, data will drive new credit disbursal systems, says Nandan Nilekani

Credit disbursal systems in the future will be entirely based on data, technology and artificial intelligence (AI) which would help in calculating non-performing assets (NPAs), enable faster credit decisions and lending would be based on working capital and not assets, Nandan Nilekani said in Bengaluru, on Tuesday.

He said that from the current lending crisis, and the NPA situation among banks and non-banking financial companies (NBFC), will emerge the next generation of credit, which will be based on technology such as artificial intelligence (AI) and data.

“Credit decisions will be made against business flows and not against assets, and the decision would be based on AI and taken in a few seconds. It can detect both good and bad credit risks. And all this will happen in real time systems. This would be good for newcomers, once small businesses have data footprint,” said Nilekani, the founding chairman of Unique Identification Authority of India (UIDAI).

Nilekani, who is also the co-founder and chairman of Infosys Ltd, was speaking in Bengaluru at an event where Paytm launched a point-of-sale (POS) or payment acceptance device, which will help smaller merchants, including kirana stores, accept payments through cash, Paytm wallet, debit and credit cards and Unified Payments Interface (UPI) apps.

“…Just like digital payments have nothing to do with cash payments, the new type of credit will have nothing to do with the old kind of credit. In the future, the digital payments history of a company would act as a reliable source of its performance and technology like AI could help in detecting fraud,” he said.

Nilekani also said that Paytm’s new device will democratize payments where everyone in every nook and corner of the country has access to digital payments.