India’s growing appetite for artificial intelligence is creating a fresh lending opportunity for banks, with Axis Bank planning to double its exposure to data centres over the next three years as companies race to build computing capacity, Bloomberg reported.

The country’s third-largest private-sector lender by assets currently has exposure to about a dozen data centre clients, with the segment accounting for a little over 2% of its corporate loan book, said Vijay Mulbagal, group head of wholesale banking coverage at Axis Bank.

Based on the bank’s first-quarter financial data, that exposure is worth more than Rs 86.88 billion ($907 million).

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“Data-related investments in India are growing,” Mulbagal said in a Bloomberg interview. “The growth is strong and companies have to resort to borrowings apart from bringing in equity to be able to meet their ambition of larger capacities.”

The bank is also looking beyond India. Axis has approached data centre companies based in Singapore about potential financing opportunities, Mulbagal said.

The rapid expansion of AI is driving demand for large-scale computing infrastructure, putting data centres at the centre of a global investment wave. More than a fifth of the value of greenfield projects globally in 2025 was linked to data centres, with announced investments exceeding $270 billion, according to the United Nations Conference on Trade and Development.

For Indian banks, the buildout is creating opportunities beyond traditional corporate lending. Data centres require large upfront investments, prompting developers to combine equity with debt to finance new capacity.

The trend is already showing up across the banking and infrastructure-finance landscape. State Bank of India Managing Director Ashwini Kumar Tewari said last month that cash-flow-based lending would become increasingly important for new-age industries such as data centres, as such businesses may not have the traditional collateral required for bank finance.

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National Bank for Financing Infrastructure and Development (NaBFID), meanwhile, has sanctioned more than Rs 3,000 crore each to at least four data centres and expects the sector to remain a key source of demand for long-term project finance. NaBFID estimates Indian data centres will need about Rs 1 lakh crore in funding through March 2031.

India could see an estimated $90 billion investment opportunity across the data centre value chain by fiscal 2035, including capacity as well as related infrastructure and services, according to KPMG.

The government is also trying to make India more attractive as a global data centre hub, including through a proposed 20-year tax holiday for foreign companies providing global data centre services from the country.

Large Indian conglomerates are making similarly ambitious bets on AI infrastructure. Gautam Adani has outlined plans to invest $100 billion in AI-ready data centres by 2035, while Mukesh Ambani’s Reliance plans to invest as much as $110 billion in AI-related infrastructure over seven years.

The lending opportunity, however, comes with its own set of challenges. Data centres consume significant amounts of electricity and water and require large parcels of land, leaving projects exposed to delays, infrastructure constraints and higher costs.

Local opposition can also slow projects. Residents in Thane, near Mumbai, have protested against Amazon’s proposed data centre in the district, according to local media reports.

For Axis Bank, the opportunity extends beyond data centres. The lender is also seeing credit demand from areas including energy transition, digital infrastructure and commercial real estate, Mulbagal said.

Axis is smaller by assets than private-sector peers HDFC Bank and ICICI Bank and is looking to expand lending to sectors that could benefit from India’s investment cycle. The bank is already the biggest among Indian lenders in arranging local-currency bond sales, according to Bloomberg-compiled data.