Neutral impactSector
AI can cut MSME underwriting to minutes, but credit decisions still need human oversight: NBFC leaders
Economic Times 4 hrs ago·11 Oct 2026, 11:44 pm
Leading non-banking financial companies (NBFCs) are increasingly using artificial intelligence to streamline the underwriting process for small and medium enterprises (SMEs). By automating the analysis of unstructured business records, AI tools can significantly reduce the time required to structure and evaluate loan applications, potentially cutting what used to take days down to mere minutes. This technological shift aims to make credit assessment faster and more efficient for lenders.
However, industry experts emphasize that AI cannot yet fully replace human judgment in credit decisions. The technology faces challenges in handling diverse business models and verifying data quality, which are critical for assessing repayment risks. Consequently, while AI acts as a powerful accelerator, human oversight remains essential to ensure accurate and responsible lending outcomes.
Investors should monitor how NBFCs balance automation with risk management. The successful integration of AI could improve operational efficiency and profit margins, but reliance on it without proper safeguards may lead to higher defaults. Keeping an eye on regulatory responses and the adoption rates of these new technologies will be key for gauging the sector's future trajectory.
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