Artificial intelligence (AI) is rapidly changing the way India's micro, small and medium enterprises manage their finances, but AI is unlikely to replace the human CFO anytime soon, according to CA Charanjot Singh Nanda, Chairman of the AI Committee at the Institute of Chartered Accountants of India (ICAI).
Speaking at the NDTV Emerging Business Conclave in Mumbai, Nanda said AI is increasingly giving smaller businesses access to financial tools that were earlier largely available to much bigger companies.
The technology can help MSMEs with financial forecasting, budgeting, cash-flow monitoring, system analysis and profitability assessment, allowing entrepreneurs to move from historical accounting to real-time financial decision-making.
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Nanda, however, drew a clear line between AI-powered financial intelligence and human judgment. AI can generate multiple scenarios and analyses, he said, but deciding which information is reliable and which strategy should be adopted remains the responsibility of the human decision-maker.
“AI has brought” large companies with turnovers of thousands of crores and smaller businesses closer together, Nanda said, with the same tools increasingly available to both.
AI can cut the compliance burden
For MSMEs, one of the biggest potential gains is automation of routine compliance work. Nanda said AI can help with tasks involving GST, TDS, income-tax information and other repetitive processes, freeing professionals to spend more time analysing data and advising businesses.
But adoption remains a challenge. Nanda identified three key hurdles: data that is not machine-readable, fragmented information and businesses' willingness to adopt technology.
He also cautioned MSMEs about AI hallucinations and confidentiality risks. Businesses must conduct a feasibility study, assess the cost-benefit equation and ensure confidential client or business data is adequately protected before deploying AI systems.
The broader shift, Nanda said, could also give chartered accountants more room to move beyond compliance and provide strategic business advice.
For MSMEs, therefore, the question may not be whether AI becomes the CFO—but whether AI finally gives them some of the financial visibility and decision-making capabilities that were once the preserve of larger companies.
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