Nandan Nilekani: AI-based systems to help more SMEs access credit: Nandan Nilekani

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BENGALURU: Aadhaar architect Nandan Nilekani fought for artificial intelligence-based credit disbursement systems on Tuesday, saying it would make it easier to access funds, especially for small and medium-sized businesses. “We should not be distracted by the current challenges. We obviously have a problem with the non-performing assets of banks (NPAs), the NPAs of non-bank financial corporations, but from that will emerge the next generation of credit which is going to be entirely technology and data based, ”Nilekani said during of an event here.

He added that credit decisions made by artificial intelligence (AI) -based systems will be based on trade flows rather than assets. “It’s good for newcomers because they may not have assets,” he said.

A recent Reserve Bank of India report indicated that non-bank lenders had witnessed tensions in the quality of their assets during the first half of the current fiscal year, with the gross NPA ratio rising to 6.3% in September 2019, compared to 6.1% in March.

Nilekani explained that AI can be used to determine good and bad credit risk, and the rates at which loans are made can be adjusted based on this assessment. “Today the big get cheap credit, the little ones get expensive credit through pawn shops and all that. It will all go away,” he added.

Asked about his message to entrepreneurs, the Infosys co-founder said they should focus on “getting on the fast track to profitability”. He added that Internet businesses around the world have become profitable after a few years of losses, and therefore, it should be borne in mind that this path has to be taken.

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