RBI’s tighter norms on unsecured consumer credit have slowed personal loans & credit card growth

The RBI’s tighter norms on unsecured consumer credit have slowed personal loans and credit card growth, “prompting a sharper focus on secured lending,” says Rohit Arora, Co-Founder and CEO, Biz2X and Biz2Credit in an exclusive interaction with Bizz Buzz.

With the RBI tightening norms around unsecured consumer credit, how do you see this reshaping the SME lending landscape in India, especially for formal and semi-formal businesses?

The RBI’s tighter norms on unsecured consumer credit have slowed personal loans and credit card growth, prompting a sharper focus on secured lending. For SMEs, this means banks and NBFCs are prioritising collateral-backed products, while semi-formal segments face slower disbursements due to higher credit costs and stricter norms. This shift is accelerating the adoption of digital and AI-driven underwriting, allowing lenders to leverage cleaner data for better risk assessment and operational efficiency. At the same time, the SME sector continues to face a significant credit gap. According to a recent SIDBI report, the addressable credit gap for MSMEs is estimated at about 24%, or nearly ₹30 lakh crore, with the gap being even higher in services (27%) and women-owned MSMEs (35%). Bridging this gap will require not only policy interventions but also innovative lending models to ensure greater financial inclusion. Overall, while unsecured lending growth has moderated, the industry is pivoting toward secured SME credit and technology-led models to maintain growth and resilience.

Agentic AI is being hailed as a breakthrough for financial services. How do you envision its role in transforming credit underwriting and portfolio monitoring in the next 2–3 years?

Agentic AI is transforming credit underwriting and portfolio monitoring by enabling real-time decisions, integrating diverse data sources, and reducing manual processes. In the next 2–3 years, its role will expand as autonomous agents analyze historical performance, behavioral trends, and macroeconomic indicators to generate dynamic risk scores, predict portfolio vulnerabilities, and ensure compliance with human oversight. AI-powered fintech platforms such as ours are enhancing underwriting capabilities, enabling faster, data-led credit decisions, optimizing costs, and scaling with confidence as the industry transforms in line with India’s positive economic growth trajectory. This shift moves beyond static financial data toward intelligent, scalable, and inclusive lending infrastructure built on end-to-end automation and real-time decisioning. The result will be a smarter, hyper-personalized, and risk-intelligent credit ecosystem that empowers businesses, drives financial inclusion, and adapts to global economic shifts. For financial institutions, adopting Agentic AI is a strategic imperative for sustainable growth.

Embedded finance is increasingly making lending more contextual. What are some of the biggest opportunities and risks you foresee as this trend scales in India and globally?

Embedded finance will reshape lending by embedding credit into everyday platforms like e-commerce, payroll, and business software, enabling contextual MSME financing and deeper inclusion. India’s market could reach USD 25 billion by 2030, supported by automated underwriting, data-driven prequalification, and partnerships across key verticals. Opportunities include hyper-personalised credit, faster approvals, and greater reach in Tier 2 and 3 cities. However, risks remain around complex regulation, data security, underwriting gaps, and API-related liabilities. Future success will depend on AI-driven credit models, alternative data integration, and robust governance to balance innovation with compliance and trust at scale.

Biz2Credit is targeting a $1 billion revenue run-rate ahead of a 2026 IPO. What are the key levers — market expansion, product innovation, or partnerships driving this trajectory?

Our $1 billion revenue run-rate goal ahead of the 2026 IPO is driven by three core levers. First, market expansion, with disbursements targeted at ₹17,000 crore in FY26, up from ₹14,000 crore in FY25. Second, product innovation, including solutions such as Underwriting Agent, Biz Analyzer Score, Bank Statement Analyzer, Digital Site Visits, and the AI-powered CRM platform, which collectively reduce approval time by 30–40% and enhance credit analysis by up to 50%. Third, strategic partnerships with banks and NBFCs, enabling end-to-end digital lending and multi-product offerings for MSMEs. These levers, combined with AI-driven automation and deeper penetration into Tier 2 and Tier 3 markets, form the foundation for scalable growth and sustainable profitability ahead of our IPO. However, amid the ongoing uncertainty as the aftereffects of the US trade tariffs, we will continue to monitor our progress while keeping a balanced approach in operations.

Fintech Global Capability Centers (GCCs) are emerging as innovation hubs. How significant is their role in accelerating digital lending transformation across markets?

Fintech GCCs have evolved into innovation hubs powering digital lending with AI, automation, and advanced analytics. India’s GCC market is projected to grow from $64.6 billion in FY24 to $99–105 billion by 2030, while global BFSI GCCs alone could reach $125 billion by 2032. These centers now focus on ER&D, building AI-driven underwriting engines, fraud detection, and real-time risk monitoring. By embedding alternative data and predictive analytics into lending platforms, GCCs enable contextual credit delivery, faster processing, and cost efficiency which is critical for scaling MSME access and Tier 2/3 penetration. As digital infrastructure matures, GCC-led innovation will play a pivotal role in secure, data-driven credit ecosystems.

With trade policy uncertainties, particularly in the US, how can Indian MSMEs insulate themselves from global disruptions while still accessing affordable credit?

With tariff uncertainty and possible hikes up to 25–50% in the US, Indian MSMEs must adopt proactive measures to stay resilient. Government credit guarantee schemes, offering up to 75% coverage on export loans, remain critical for liquidity support. Banks and NBFCs are also easing stress through flexible repayment and working-capital lines. Beyond this, MSMEs should diversify export markets via FTAs, leverage platforms like TReDS for invoice financing, and adopt digital trade infrastructure. Embracing data-driven credit and AI-based underwriting can ensure faster, affordable credit, while reducing dependency on single markets. Strategic agility, digital adoption, and diversified exposure will be key to navigating global volatility.

New-age lenders like Challenger banks and NBFCs are disrupting credit delivery. What makes their digital-first infrastructure model more agile or scalable compared to traditional banks?

Challenger banks and digital-first NBFCs have an inherent edge because they operate without legacy IT or branch-heavy models, using cloud-native architecture and open APIs to scale rapidly. Their ability to integrate India Stack layers like Aadhaar e-KYC, UPI, and consent-based frameworks enables frictionless onboarding and multi-product offerings, critical for MSMEs. Regulatory tightening by RBI around digital lending norms has increased compliance costs, but these players remain agile due to low operational overhead and real-time monitoring capabilities. Unlike traditional banks, they can embed compliance into their tech stack, ensuring faster innovation, deeper market penetration, and a resilient credit delivery ecosystem in a regulated environment.

Your focus on Agentic AI and embedded lending is ambitious — with loan approvals in under four minutes. Can you share how this technology is being adopted by traditional banks and NBFCs, and how it changes their risk-reward equation?

Traditional banks and NBFCs are increasingly adopting Agentic AI and embedded lending models, catalysing a major shift in credit delivery. Biz2X is now powering several leading banks and NBFCs with AI-enabled digital lending platforms featuring Agentic AI Bots that cut underwriting turnaround by over 50%, reduce paperwork and site-visit costs, and enhance fraud mitigation. These tools leverage alternative data and predictive analytics to deliver personalised credit offers while maintaining human oversight in critical decisions. This transformation enables traditional lenders to increase throughput, reduce operational costs, improve credit quality, and stay competitive in a market moving toward real-time, data-driven credit ecosystems.

As the global economy navigates inflationary pressures and geopolitical flux, what should be the priority for fintechs serving MSMEs — growth, compliance, or resilience?

In an environment marked by inflation, tariff uncertainty, and potential global slowdown, fintechs serving MSMEs must first prioritise resilience. This means strengthening liquidity buffers, diversifying funding sources, and leveraging digital platforms for cost efficiency. The next priority is compliance, as regulatory scrutiny around digital lending, data privacy, and AI is intensifying across markets. Building robust governance into tech infrastructure ensures long-term credibility. Growth should follow resilience and compliance, anchored in scalable models and partnerships that can withstand volatility. Fintechs that invest early in resilience and regulatory alignment will not only navigate current shocks but also capture sustained opportunities in MSME financing.

What’s your outlook on regulatory evolution in the fintech credit space? Do you see innovation being throttled or more balanced in the years ahead?

Regulation in fintech credit is moving toward structured flexibility enabling innovation but with guardrails. RBI’s digital lending norms have already stabilised the market by enforcing transparency and stronger risk-sharing standards like FLDG. This has recalibrated models such as co-lending, where only well-capitalised fintechs will now scale effectively. Rather than throttling innovation, regulation is creating a merit-based ecosystem that rewards governance and sustainable economics. Looking ahead, frameworks like regulatory sandboxes and self-regulatory bodies will allow controlled experimentation in areas like Agentic AI and embedded finance. The future belongs to players who can embed compliance into technology while innovating at scale, balancing agility with resilience.

EoM.