“The proposal to use AI-driven credit assessment tools is aimed at enabling faster and more inclusive loan approvals, particularly for first-time borrowers and those in rural areas who remain outside the traditional credit ecosystem,” the official said.
He added that the idea is to use alternative data sets to assess repayment capacity and bring more people into the fold of
The possibility of leveraging credit lines on UPI (Unified Payments Interface) is also under examination. “There is a view that credit lines on UPI can be better leveraged to provide small-ticket, short-term credit in a seamless manner,” another source said.
At present, private sector and small finance banks typically verify a borrower’s credit history through agencies like CRIF Highmark and Cibil, which maintain records of past loans, repayment behaviour, and defaults, if any. A good score from these bureaus indicates that the borrower is likely to repay on time.
Several schemes such as MUDRA for micro enterprises, PM-Vidyalaxmi, PM SVANidhi 2.0, Stand-Up India 2.0, and PM Vishwakarma are operational to support targeted segments.
The official said discussions have also covered enhancing the scope of the Prime Minister’s Employment Generation Programme (PMEGP) to support upgradation and expansion of existing enterprises. “There is also a proposal to link skill development initiatives with adequate infrastructure availability, particularly in rural areas, to ensure that credit flows translate into sustainable income generation,” added the official.
The source said that credit cannot work in isolation. Skill development, infrastructure support, and market linkages have to move in tandem, he added. “There is a need for integrated skill development and training components alongside credit support,” another source said. The government is examining the expansion of colending arrangements between banks and other financial institutions to improve credit flow to priority sectors. Greater deployment of women business correspondents (BCs) is being considered to strengthen outreach at the grassroots level.
In addition, the government is also deliberating on introducing more tailor-made credit products, including affordable housing loans, for gainfully employed people such as Anganwadi and ASHA workers.
“Designing customised products for specific occupational groups is under consideration,” the source said, adding that digital infrastructure is expected to play a key role in the proposed reforms.
Officials are exploring digital and assisted journeys for all government credit schemes at the level of banking correspondents to simplify application and disbursal processes. Opening up the Unified Lending Interface (ULI) for business-to-consumer transactions, including application processing, is also being discussed, the official said.
