RBI Governor Highlights AI's Transformative Potential and Challenges in Financial Sector

RBI Governor Shaktikanta Das emphasized the transformative potential of AI in financial services at a Bengaluru conference. While AI offers immense opportunities for personalized services and enhanced risk management, Das also cautioned about data privacy and ethical governance concerns, stressing the importance of robust AI regulations. 

The integration of artificial intelligence (AI) into financial services presents significant opportunities, according to Reserve Bank of India (RBI) Governor Shaktikanta Das, who spoke at the Global Conference on Digital Public Infrastructure and Emerging Technologies in Bengaluru. He emphasized AI's transformative role in the financial sector.

"Today, AI is making strides in financial sectors with services like chatbots, intelligent alert systems, fraud risk management, and credit modeling," Das stated. "Integrating AI into a robust and responsible Digital Public Infrastructure (DPI) can significantly enhance its capabilities and efficiency," he added.

Das highlighted that the fusion of DPI with AI could usher us into a new era of "Digital Public Intelligence." He noted the extensive benefits for stakeholders: hyper-personalized products and services for customers, advanced risk management tools for financial institutions, and improved real-time monitoring for regulators, ensuring better market stability.

Despite its potential, Das also warned of challenges such as data privacy concerns and the need for ethical AI governance. "Financial institutions must ensure AI models are explainable to prevent misuse and bias," he remarked. The possibility of AI being used to spread misinformation poses additional risks to digital systems and financial institution reputations. Das commended governmental efforts to harness AI's potential while implementing robust governance frameworks. He highlighted India's role as the lead chair of the Global Partnership on Artificial Intelligence (GPAI) in 2024, focusing on promoting trustworthy AI.

In March, the Union Cabinet approved the national-level India Artificial Intelligence mission with a budget of Rs 10,371.92 crore. The mission encompasses key areas like compute capacity, foundational models, application development, and safe AI practices. The Ministry of Electronics and Information Technology is also launching initiatives to ensure sectoral safety.

India is establishing an AI Research Analytics and Knowledge Dissemination Platform aimed at developing AI-enabled solutions for local challenges.