New Delhi, April 2 (IANS) Driven by rapid digitisation, rise of fintech and increased government support, the rural lending landscape in India is undergoing a significant transformation, creating new opportunities for structured and efficient lending models and ensuring that credit reaches those who need it most, according to a new report.

The government initiatives such as the Kisan Credit Card (KCC) and subsidised loan schemes continue to play a crucial role in supporting farmers and rural entrepreneurs.

The government has increased the subsidized KCC loan limit from Rs 3 lakh to Rs 5 lakh, benefiting approximately 7.7 crore farmers, including fishermen and dairy farmers

In the meantime, fintech players are leveraging digital platforms, alternative credit assessment models, and seamless disbursal mechanisms to bridge gaps in traditional lending.

According to data from global market intelligence firm 1Lattice, this led to a 78 per cent share of personal loan sanctions by fintech lenders from April to September 2024, primarily driven by small-ticket loans from first-time and underserved borrowers

“The expansion of agricultural loan access for small and marginal farmers has seen the share increase from 57 per cent in FY15 to 76 per cent in FY24,” according to the report.

Additionally, the Reserve Bank of India (RBI) has raised the limit for collateral-free agriculture loans from Rs 1.6 lakh to Rs 2 lakh, enhancing access to formal credit channels for small and marginal farmers

Innovations such as Aadhaar-based eKYC, Unified Lending Interface (ULI), and alternative credit scoring models using utility bill payments and social media behaviour are also streamlining credit access and enabling faster loan approvals for individuals with limited credit histories.

"Rural lending in India is at a pivotal moment, with technology and policy support driving unprecedented access to credit for underserved communities. The report underscores the importance of continued innovation and collaboration among stakeholders to build a more inclusive and resilient financial ecosystem," said Amar Choudhary, CEO and Co-Founder of 1Lattice.