Smart calls, human credit: the guarded rise of AI in India's microfinance sector
India's microfinance institutions are expanding the use of artificial intelligence across customer calls, cybersecurity and internal operations as lenders look to improve efficiency, reduce costs and strengthen risk management, according to executives.The adoption marks a shift from experimental deployments to operational use cases, although firms remain cautious about applying AI to lending decisions, where much of the assessment still relies on field verification and human judgment.While lenders are increasingly buying AI capabilities, some are avoiding software-as-a-service (SaaS) models for customer-facing applications, preferring to host AI models within their own infrastructure to retain control over sensitive borrower data."We are not taking SaaS-based AI solutions. The agents are hosted on our own infrastructure. We are using Azure, but the hosting is on our infrastructure itself, so no data is flowing outside," said Avinash Yadav, chief information officer at Spandana Sphoorty Financial Ltd. The listed microlender has a market capitalisation of
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