Embedded Finance and the Reconstruction of Credit Infrastructure in India: Co-lending, the Account Aggregator Network, and the Political Economy of Digital Credit

DOI

10.2991/978-94-6239-772-9_12How to use a DOI?

Keywords

embedded finance; co-lending; Account Aggregator; credit infrastructure; MSME finance; digital public infrastructure; regulatory sandboxes; fintech India; ULI; alternative data

Abstract

India’s credit market stands at a structural inflection point. Decades of supply-side constraint — characterised by rigid collateral requirements, high transaction costs, and an entrenched informational asymmetry between lenders and thin-file borrowers — have left an estimated credit gap of ₹25–37 trillion for micro, small, and medium enterprises alone, and a comparable shortfall for underserved households. This paper argues that three concurrent innovations — the embedded finance paradigm, the Reserve Bank of India’s Co-lending Model, and the Account Aggregator (AA) consent-based data framework — are collectively reconstructing India’s credit infrastructure from first principles. This paper examines role of technology in reshaping the India’s credit ecosystem using the reports of Reserve Bank of India and SIDBI. This study explores the role of digital platforms in reaching customers with low cost and simple borrowing process. Co-lending process improved the access to finance, consent based financial information sharing and informed credit assessment against the convention credit histories. Co-lending facilities offered by the banking and non-banking institutions supported the underserved borrowers and ensured fairness and transparency in the credit decision. This paper aims to propose a digital framework and transparent lending practices to facilitate the financial inclusion and develop a digital credit eco system in India.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - J. V. Balasubramanian
PY  - 2026
DA  - 2026/09/07
TI  - Embedded Finance and the Reconstruction of Credit Infrastructure in India: Co-lending, the Account Aggregator Network, and the Political Economy of Digital Credit
BT  - Proceedings of the 2nd International Conference on Innovations and Challenges in Financial Technology (ICICFT 2025)
PB  - Atlantis Press
SP  - 146
EP  - 163
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-772-9_12
DO  - 10.2991/978-94-6239-772-9_12
ID  - Balasubramanian2026
ER  -