How fintechs are using AI to balance recovery efficiency

India’s digital lending ecosystem has grown at an unprecedented pace over the last few years; 44 mn new to credit borrowers have entered the formal credit system as of February 2026 with access to loans through digital channels. This expansion has been a significant step toward financial inclusion, but it has also brought a new challenge into focus: how do lenders scale recovery operations responsibly as credit volumes increase?

For a long time, collections were viewed primarily as a backend operational function. The objective was simple: recover dues as quickly as possible. But the lending industry has evolved.