Rajeshwar Rao, Deputy Governor of Reserve Bank of India (RBI) has stated that over the decades, Indian banking sector has exhibited its ability to integrate meaningful technological advancements. As AI transforms financial services, it's clear this is a development which is not a mere upgrade but a major shift impacting products, processes, and operations. From the risk perspective, the long-term implications of AI adoption on the financial system remain uncertain but exhibit potentially far-reaching consequences.
He noted that it is imperative for the financial sector to approach AI adoption with foresight, investing not just in innovation, but also in resilience by building strong governance structure, diversifying dependencies, engaging in continual assessment of emerging risks, and ensuring their AI strategies align with long-term safety and sustainability of the financial system. Ensuring that AI-driven decisions are ethical, unbiased, and transparent will be paramount in building a sustainable, AI-powered financial future. This calls for optimistic vigilance; wherein AI and other technologies in banking are neither feared nor embraced blindly but navigated. The RBI will continue to provide an enabling regulatory environment so that together we can build a banking system that truly builds Bharat, and not just builds, but transforms Bharat, Rao concluded.