The RBI Governor Said Two Things About Fintech Credit. The Second Matters More.
Recently India's central bank governor said two things about fintech and small-business credit. The first made every headline. The second is the one I'd underline.
At the Global Fintech Fest in Mumbai, RBI Governor Sanjay Malhotra credited fintechs with bridging India's MSME credit gap — extending formal, collateral-light credit through cash-flow lending, account aggregators and the Unified Lending Interface to millions of businesses that were, for decades, invisible to traditional underwriting.
He's right, and it's a genuinely good story. For twenty years I built the software that decided who got credit, and the hardest problem was always the borrower with no balance sheet the model could read. Cash-flow data and shared rails have finally made that borrower visible. That is real progress, at a scale nobody predicted.
But two things nag at me as someone who has built these systems.
Access is not the same as underwriting
Extending credit to the invisible is the easy half. Pricing it correctly is the hard half — and much of this new book is young. A fast-growing loan portfolio flatters every metric: defaults look low largely because most of the loans haven't had time to go bad yet. The real test of cash-flow lending isn't this quarter's approval rate. It's how the 2024–26 vintages behave through the first genuine downturn. We won't know how good the underwriting was until then.
The second thing the Governor said matters more than the first
A day later, he told fintechs to treat customer data as a fiduciary responsibility — not a business asset. That line deserved the headlines. The whole model rests on it. The invisible borrower became visible by handing over their data: their transactions, their GST, their bank flows. That trust is the rail. Monetize it carelessly, leak it, or use it against the person who gave it, and you don't just lose a customer — you break the mechanism that made inclusion possible in the first place.
The credit-access gap is closing. Good. But access was always the visible problem. The invisible ones — whether the new book is priced right, and whether the data trust holds — are what decide if this lasts.
What do you think closes first: the credit gap, or the trust that made it closeable?