A Reserve Bank of India (RBI) committee has recommended the creation of a comprehensive framework to guide the development and adoption of artificial intelligence (AI) in the country’s financial sector.
The proposals aim to accelerate innovation while safeguarding against risks associated with the fast-evolving technology, according to Reuters.
According to the report, released on Wednesday, the committee has called for building a national digital infrastructure to support indigenous AI model development, alongside a multi-stakeholder standing committee tasked with evaluating risks and opportunities. It also recommended establishing a dedicated fund to incentivise the creation of AI models specifically designed for the needs of India’s financial services industry.
“The report envisions a financial ecosystem where encouraging innovation is in harmony, and not at odds, with mitigation of risk,” the RBI said in a statement.
The document outlined 26 recommendations grouped into six categories: infrastructure, capacity, policy, governance, protection and assurance. Together, these are designed to create a robust foundation for the ethical and responsible deployment of AI technologies across banking, payments, insurance and other financial services.
Among the proposals, the committee suggested the issuance of an enabling framework to integrate AI with India’s digital public platforms, including the widely used Unified Payments Interface (UPI). It also emphasised the importance of designing audit frameworks to ensure transparency and accountability in AI-driven financial systems.
The eight-member committee was led by Pushpak Bhattacharyya, a computer scientist at the Indian Institute of Technology (IIT) Bombay. Formed in December, its mandate was to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREEAI) for the finance sector.
Highlighting the delicate balance required, the report noted, “The challenge with regulating AI is in striking the right balance, making sure that society stands to gain from what this technology has to offer, while mitigating its risks.”
The committee’s recommendations, if implemented, could significantly reshape India’s approach to AI in finance, fostering innovation while maintaining safeguards to ensure stability and trust within the system.
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