As the year comes to an end, the Non-Banking Financial Company (NBFC) sector in India is set for robust growth in the upcoming quarters. This optimism is driven by macroeconomic factors such as the Reserve Bank of India’s interest rate reductions, decreased Goods and Services Tax (GST), and the surge in consumption fuelled by festive demand. Over the last financial year, the sector has actively incorporated Artificial Intelligence (AI), establishing it as a significant technological differentiator. From elevating customer experience to streamlining operational processes, technology has become central to the transformation of the industry.
Technology: The Catalyst for Transformation
Since the inception of the Digital India initiative in 2015, financial institutions have leveraged technology to rethink governance, expedite product launches, and enhance transparency. AI is now reshaping the lending landscape – not merely disrupting it but fundamentally transforming it. Innovations such as instant loan approvals for customers with limited credit history, machine learning models for fraud detection and identity verification, and liveness checks for secure onboarding have made these processes faster, more cost-effective, and highly accurate.
AI is set to become the foundation for delivering personalised customer experiences. With 24/7 multilingual virtual assistants, customers can receive precise answers to queries, investment recommendations, and insurance product advice. AI can analyse financial, social, and spending data to offer risk-based insurance instruments or instant loans. Authentication processes will become seamless and preventative, shifting security from a reactive to a proactive stance.
Moreover, AI-driven predictive analytics enables NBFCs to anticipate customer needs, identify potential defaults before they occur, and design customised repayment plans that reduce non-performing assets. By integrating AI with mobile banking and digital wallets, NBFCs can reach customers in even the remotest regions, making credit more accessible and relevant. Additionally, AI tools now assist in regulatory compliance, automatically flagging anomalies and generating audit-ready reports, which simplifies governance and strengthens investor confidence.
Bringing Bharat into the Fold
Rural India comprises 70% of the nation’s population, yet many remain excluded from formal credit systems and face obstacles such as limited financial literacy and infrastructure. Technology has the potential to bridge this gap by using alternative data sources to assess creditworthiness and provide accurate insights for new product design and customised financial solutions-including crop loans, livestock loans, and tractor financing. This enables digital outreach for quicker loan disbursements and enhances financial literacy, boosting overall adoption.
Government initiatives like Digital India, PMGDISHA (Pradhan Mantri Gramin Digital Saksharta Abhiyan), and BharatNet, where TCS has played a key role in the Intelligent Village Initiative with BSNL, are paving the way for inclusive growth. The rural financial system can now utilise digital outreach to facilitate online loan applications, faster loan disbursements, real-time loan status monitoring from any device, easier repayments, and other loan servicing transactions.
These efforts are complemented by microfinance models and partnerships between NBFCs and fintech players, allowing financial services to penetrate villages and small towns with minimal infrastructure. Digital literacy campaigns, community workshops, and gamified mobile learning platforms have accelerated adoption, enabling farmers and small business owners to make informed financial decisions. According to industry estimates, digital lending penetration in rural India is projected to grow at over 20% annually, a clear indicator that technology is breaking barriers to inclusion.
The Imperative of Security and Sovereignty
With greater digital inclusion comes increased cybersecurity risks. India faces thousands of cyberattacks daily, making resilience a critical priority. NBFCs must invest in blockchain technology for secure transactions, enhanced firewalls, endpoint protection, and sovereign data centres with robust business continuity strategies.
The current geopolitical climate underscores the importance of data sovereignty as a cornerstone of India’s Rural Digital Revolution. Expanding digital inclusion expands the nation’s digital footprint, which must be protected from geopolitical threats. Maintaining data sovereignty and localisation is essential.
The enactment of the DPDP Act (2023) marked the initial step. The next phase involves developing a national infrastructure to localise data using assets made in India, followed by achieving AI sovereignty through the deployment of indigenous Large Language Models (LLMs). Atmanirbhar Bharat is about not only constructing a secure environment but also controlling access to it.
Also Read: Digital Inclusion by Design plutosONE’s Bharat Centric Playbook
TCS: Enabling Transformation of India’s Financial Nervous System
TCS has been instrumental in modernising the country’s financial infrastructure. TCS partners with several NBFCs across digital, data, cybersecurity, and product innovation like Loan Origination Systems (LOS), Loan Management Systems (LMS), and collections on sovereign cloud, supported by accelerators and domain expertise for rapid transformation.
TCS has also introduced AI-powered analytics tools that provide NBFCs with deep insights into customer behaviour, portfolio risk, and operational bottlenecks. By leveraging cloud-native platforms, NBFCs can scale operations seamlessly and integrate new products quickly. TCS’s solutions also focus on ESG (Environmental, Social, Governance) compliance, helping NBFCs align with global sustainability standards while serving Bharat responsibly.
The Path Forward: Technology as a Non-Negotiable
Technology is now indispensable for building a future-ready financial ecosystem. As NBFCs adopt AI, digital outreach, and sovereign infrastructure, they will unlock new opportunities for Bharat, ensuring resilience, inclusion, and trust across the financial landscape.
Views expressed by: Ujjwal Mathur, President – India Business & Strategic Accounts , TCS
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