India Central Bank Panel Proposes AI Framework for Financial Sector

A Reserve Bank of India (RBI) committee has proposed a framework to develop artificial intelligence (AI) capabilities in the country’s financial sector while addressing associated risks.

Credit: Shapoorji Pallonji

The recommendations, released Wednesday, include establishing digital infrastructure to support the creation of indigenous AI models and forming a multi-stakeholder standing committee to assess risks and opportunities.

The committee also suggested creating a fund to incentivise the development of AI models tailored to India’s financial services sector.

The report, titled Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREEAI), outlines 26 recommendations across six categories: infrastructure, capacity, policy, governance, protection and assurance.

The eight-member committee, chaired by Pushpak Bhattacharyya, a computer scientist at the Indian Institute of Technology Bombay, was formed in December.

Key proposals include issuing an enabling framework to integrate AI with existing digital public platforms such as the Unified Payments Interface (UPI), and designing audit frameworks to ensure accountability.

The RBI said the report envisions a financial ecosystem where innovation and risk mitigation coexist.

The report noted that regulating AI requires balancing the benefits of the technology with the need to manage its risks.

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• RBI committee recommends AI framework for financial sector

• Proposals include digital infrastructure, risk evaluation committee, and development fund

• 26 recommendations span infrastructure, policy, and governance

Source: REUTERS