ARTIFICIAL INTELLIGENCE AND THE TRANSFORMATION OF MORTGAGE LENDING IN INDIA

AUTHOR – LAAVANYA NAIR, STUDENT AT CHRIST (DEEMED TO BE) UNIVERSITY, PUNE, LAVASA CAMPUS

BEST CITATION – LAAVANYA NAIR, EMPLOYMENT INEQUALITY IN THE AGE OF ARTIFICIAL INTELLIGENCE: CHALLENGES AND POLICY RESPONSES, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (8) OF 2026, PG. 183-190, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/IJLRV6I819

Abstract

India’s housing finance sector stands at a critical inflection point. Rising urbanisation, a growing middle class, and government-led affordable housing initiatives have expanded mortgage demand dramatically; yet the traditional lending model — characterised by manual underwriting, paper-intensive documentation, and branch-dependent distribution — has struggled to keep pace. Artificial intelligence (AI) has emerged as the key technological disruptor capable of bridging this structural gap. This paper examines how AI is reshaping mortgage origination, credit assessment, fraud detection, and regulatory compliance within the distinct context of the Indian financial ecosystem. Drawing on market data, regulatory developments including the Reserve Bank of India’s Digital Lending Directions 2025, and industry case studies, the paper argues that AI-driven innovation is not merely improving operational efficiency but is fundamentally democratising access to housing credit for underserved populations. Challenges around data privacy, algorithmic bias, and the need for explainable AI are also critically examined, along with a forward-looking policy framework for responsible adoption.

Keywords: Artificial Intelligence, Mortgage Lending, Housing Finance, India, Fintech, Credit Assessment, RBI, Financial Inclusion