The committee’s mandate includes addressing critical challenges such as algorithmic bias, decision explainability and data privacy.
The proposed committee will include specialists from various disciplines and aims to provide a robust, comprehensive and adaptable framework tailored to the needs of the financial sector.
Earlier, Governor Das highlighted the vulnerabilities introduced by AI, including increased risks of cyberattacks and data breaches.
The Reserve Bank of India (RBI) has announced the formation of a committee to develop a framework for responsible and ethical use of artificial intelligence (AI) in the financial sectors.
The committee’s mandate includes addressing critical challenges such as algorithmic bias, decision explainability and data privacy, while establishing a roadmap for the sustainable integration of AI.
Following the RBI Monetary Policy Committee meeting, Governor Shaktikanta Das said, “The financial sector landscape is undergoing rapid transformation, driven by technologies such as AI, tokenization and cloud computing. To harness the benefits of these technologies while mitigating associated risks such as algorithmic bias, explainability and data privacy, a committee comprising experts from various fields will be established.
“This committee will recommend a framework for responsible and ethical activation of AI (FREE-AI) in the financial sector,” he added.
The proposed committee will include specialists from various disciplines and aims to provide a robust, comprehensive and adaptable framework tailored to the needs of the financial sector.
The RBI has emphasized the importance of early intervention to address AI risks. “While the benefits of AI are significant, the associated risks, including algorithmic bias, decision explainability, and data privacy concerns, are equally great. To fully realize the benefits, these risks must be considered at the early stages of adoption,” the central bank said.
Earlier, Governor Das highlighted the vulnerabilities introduced by AI, including increased risks of cyberattacks and data breaches. He also pointed out that the opaque nature of AI systems makes it difficult to audit and interpret the algorithms behind financial decisions.
In addition to this announcement, the Reserve Bank of India (RBI) has made other announcements, such as the introduction of an AI/ML-based model called MuleHunter.AI to detect mule bank accounts, allowing small finance banks (SFBs) will offer pre-sanctioned credit lines through the Unified Payments Interface (UPI), among others.
Das also said the RBI would introduce podcasts as a new medium of communication, thereby expanding its outreach initiatives.
According to government data, Indians lost up to INR 11,333 Cr to cyber fraud in the first nine months of 2024 alone. the country saw as many as 6.32 Lakh cases of UPI frauds worth INR 485 Cr during the first six months of the current financial year 2024-25 (FY25)