RBI's AI Panel Urges Guardrails in Financial Tech

An RBI committee recommends that financial institutions create policies to address AI-related risks. The report proposes a responsible framework, including 26 recommendations within six pillars, emphasizing innovation and risk mitigation balance. Key suggestions involve board-approved AI policies and enhanced governance, cybersecurity, and consumer awareness strategies.

An RBI panel has recommended that banks and financial institutions develop policies to mitigate risks from AI use in the financial sector. Without proper guardrails, AI can exacerbate existing risks, the report warns.

The Reserve Bank of India's committee on AI, established last year, seeks to create a responsible and ethical framework for AI enabling in finance. Published on Wednesday, the report outlines a framework to regulate AI use, aiming to balance its potential and the risks it poses.

The committee recommends a board-approved AI policy for all regulated entities and suggests increasing consumer awareness of AI interactions. It also emphasizes expanding product approval processes, consumer protection frameworks, and cybersecurity practices to cover AI-related aspects.

(With inputs from agencies.)