Ethical Finance and AI for Inclusion
Finance has long been a gated system in modern banking, where access is often determined by factors such as credit scores, tax returns, or collateral. Unfortunately, this has rendered billions of workers, farmers, gig earners, and micro-entrepreneurs invisible within the formal financial ecosystem. They are excluded not because of a lack of capability, but due to a lack of documentation.
However, India is pioneering a transformation by leveraging the power of Artificial Intelligence (AI) and its digital public infrastructure. In February 2026, New Delhi will host the India AI Impact Summit, where global leaders will discuss a groundbreaking financial ecosystem that promotes inclusion and responsible AI.
The Traditional Lender’s Perspective
Traditionally, lenders have relied heavily on historical records, including years of tax filings and clean credit reports. Yet, nearly 80% of India’s workforce operates within the informal economy, making their financial identities invisible to banks. Innovative Indian fintech companies are developing algorithms that analyze a range of data sources, such as UPI payment trails, GST invoices, and e-commerce transaction histories. These signals provide a more accurate assessment of a borrower’s reliability than traditional credit scores.
A New Approach to AI and Public Infrastructure
The IndiaAI Mission aims to replicate the success of the Unified Payments Interface (UPI) by creating a national-grade GPU infrastructure that democratizes access to high-performance computing. This initiative marks a significant shift from the traditional Western model, where AI capabilities are concentrated in a few private companies. Instead, India envisions compute as a public good, ensuring the next generation of AI innovation benefits society as a whole.
AI-driven underwriting models are now capable of evaluating real economic activity through various data points, including digital payment patterns and behavioral repayment trends. This development allows gig workers, micro-enterprises, and women-led businesses to access micro-credit even without formal financial records.
The Economic Impact of AI
The economic implications of these advancements are profound. The AI market within India’s Banking, Financial Services, and Insurance (BFSI) sector has grown from $0.75 billion in 2019 to $2.01 billion in 2024, with projections estimating a rise to $33.68 billion by 2032. Inclusion fosters economic multiplication, and every rupee lent to first-time borrowers has a broader impact.
Ethics in AI
What distinguishes India’s approach is the ethical framework governing AI use in lending. The Reserve Bank of India’s “FREE-AI” framework mandates that every lending algorithm demonstrate fairness, accountability, and explainability. This framework prevents invasive practices like scraping call logs or reading SMS history, ensuring that AI relies solely on clean, auditable data.
The Role of Public Digital Infrastructure
None of these advancements would be possible without a robust public digital infrastructure. The Aadhaar system verifies 1.3 billion identities instantly, while UPI processes over 640 million transactions daily. The Data Empowerment and Protection Architecture (DEPA) allows for consent-based data portability, facilitating the development of fair credit models.
The Future of Financial Inclusion
As the India AI Impact Summit approaches, it will showcase a financial system underpinned by ethical AI. Attendees will witness gig workers receiving micro-loans instantly and MSMEs accessing credit without collateral, all while ensuring transparency in local languages.
AI is not only accelerating credit access but also democratizing trust. It is transforming India’s demographic strength into tangible economic growth. Small business owners, farmers, gig workers, and women entrepreneurs are no longer waiting for banks to change; they are actively building the next phase of India’s economy with ethical AI as their ally.
When the world gathers in Delhi in 2026, it will not only observe a new frontier in financial inclusion but will also take home a blueprint showing that AI can harmonize growth and ethics. The most powerful algorithms are those that treat every citizen with fairness, consent, and dignity.
