Tata Capital, the non-banking financial company (NBFC) under Tata Sons, has reported a 14 basis points reduction in its credit costs year-on-year for FY26, now at 1.2%. This improvement is attributed to the integration of artificial intelligence (AI) in its lending and monitoring processes. Rajeev Sabharwal, managing director and CEO, emphasized that AI complements robust credit policies and processes, enhancing decision-making speed and accuracy. The company’s net profit surged 43% year-on-year to ₹1,502 crore, with a total loan book reaching ₹2.7 trillion, up 21% from the previous year. AI has significantly streamlined operations, with AI-driven assessments aiding 80% of small business underwriting and boosting credit manager productivity by 30%. Despite external challenges, such as the West Asia conflict, Tata Capital reported minimal impact on its clients, indicating resilience in the SME sector. The firm remains cautious about certain segments within the micro, small, and medium enterprises (MSME) business, advising its credit team to closely monitor working capital cycles.