New Delhi, May 15 -- Artificial intelligence (AI)-driven lending models have the potential to close an estimated credit gap of USD 130-170 billion for India's micro, small and medium enterprises (MSMEs), according to a government release issued this week.

The PIB backgrounder noted that AI-based credit systems are reshaping India's lending landscape by extending formal credit access to MSMEs, informal workers, and first-time borrowers who typically lack conventional credit histories.

Rather than relying solely on CIBIL scores, AI-powered models assess creditworthiness through alternative data - including digital payment transactions, GST filings, bank statements, and utility bills - while also reducing MSME dependence on informal lendin...