Year: 2026 | Month: June | Volume 13 | Issue 1
Digital Finance, Financial Inclusion, and NPA Risk: Leveraging Technological Innovation for Sustainable Futures
Shaila Kamath
DOI:10.30954/2348-7437.1.2026.5
Abstract :
This study examines how Digital Finance and Technological Innovation can contribute to sustainable business practices and social enterprises while addressing the persistent challenge of Non-Performing Assets (NPAs). It explores whether digital financial systems can reduce credit risk, improve repayment behavior, and support financially vulnerable communities. The paper adopts an analytical approach using secondary data, policy reports, and empirical insights from financial inclusion and NPA-related studies. It evaluates digital tools such as mobile banking, digital credit scoring, AI-based risk assessment, fintech platforms, and data-driven monitoring systems in mitigating loan defaults and strengthening sustainable financial ecosystems. The study finds that digital finance enhances transparency, real-time monitoring, and borrower profiling, which significantly reduces information asymmetry—a major cause of NPAs. Digital payment systems promote disciplined repayment through automated reminders and structured repayment tracking. Social enterprises leveraging FinTech platforms improve access to responsible credit and financial literacy, thereby lowering default risk. However, digital exclusion, low financial literacy, cyber security threats, and algorithmic bias may create new vulnerabilities if not carefully regulated. Strengthening digital infrastructure, improving financial literacy, and implementing ethical AI frameworks are essential for reducing NPA risks while promoting inclusive and sustainable growth. The study links digital finance, sustainability, and NPA risk management within a unified framework, highlighting how innovation can transform credit ecosystems and build resilient, inclusive economies.
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