RBI Governor Urges Banks to Keep Control of AI

Artificial intelligence and machine learning can help lenders expand business, lift profits and streamline operations, but growing dependence on a handful of technology providers can also concentrate risk across the financial system. The Reserve Bank of India has therefore framed banks’ adoption of AI as both a competitive opportunity and a governance challenge, requiring institutions to retain control of critical systems while strengthening cybersecurity, data protection and oversight of hard-to-audit algorithms.

On Oct. 14, 2024, then-RBI Governor Shaktikanta Das told the RBI@90 High-Level Conference in New Delhi that banks must ride on the advantages of AI and Big Tech rather than allow the technologies to control them. Das said failures or disruptions at a small group of providers could cascade through the financial sector, while opaque models could produce unpredictable market consequences. He urged banks and other financial institutions to implement adequate risk-mitigation measures, citing cyberattacks and data breaches among the main vulnerabilities.