In a significant move to ensure responsible and ethical adoption of Artificial Intelligence (AI) in India’s financial sector, the Reserve Bank of India (RBI) has announced the formation of an eight-member expert committee. The committee, chaired by Pushpak Bhattacharyya, Professor at the Department of Computer Science and Engineering, IIT Bombay, aims to build a robust framework for Responsible and Ethical Enablement of AI (FREE-AI) in financial services.
A Strategic Step Towards Ethical AI Integration
The financial sector in India is witnessing a surge in AI adoption across banking, payments, fintech, and lending platforms. However, this rapid adoption raises concerns about ethical governance, risk mitigation, and regulatory compliance. The newly-formed committee will address these concerns by developing a comprehensive and adaptable AI governance framework tailored for financial institutions.
The committee’s mandate includes:
- Evaluating global and domestic AI adoption trends in the financial sector.
- Assessing regulatory and supervisory approaches from international markets.
- Identifying potential risks linked to AI adoption in financial services.
- Recommending a governance framework for ethical AI implementation.
- Developing compliance guidelines for banks, NBFCs, fintech firms, and payment system operators.
Committee Composition: A Blend of Expertise
The committee brings together leaders from academia, industry, government, and regulatory bodies, ensuring a multidisciplinary approach:
- Pushpak Bhattacharyya: Professor, IIT Bombay (Chairperson)
- Debjani Ghosh: Independent Director, Reserve Bank Innovation Hub
- Balaraman Ravindran: Professor and Head, Wadhwani School of Data Science and AI, IIT Madras
- Abhishek Singh: Additional Secretary, Ministry of Electronics and IT
- Rahul Matthan: Partner, Trilegal
- Anjani Rathor: Chief Digital Experience Officer, HDFC Bank
- Sree Hari Nagaralu: Head of Security AI Research, Microsoft India
- Suvendu Pati: CGM, FinTech Department, RBI
Focus on Risk Mitigation and Governance
The committee will prioritize identifying AI-associated risks such as data privacy breaches, algorithmic biases, and cybersecurity vulnerabilities. It will also design mechanisms for AI risk evaluation, mitigation, and ongoing monitoring across financial services.
Promoting Ethical AI Adoption
The RBI emphasizes the importance of ethical AI practices, ensuring fairness, transparency, and accountability in AI deployments. The framework will cover governance structures, compliance requirements, and ethical considerations, ensuring that financial institutions uphold responsible AI standards.
Key Deliverables and Timeline
The committee has been tasked with submitting its report within six months from its first meeting. The recommendations are expected to serve as a blueprint for AI governance in India’s financial sector, balancing innovation with safety and accountability.
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A Forward-Looking Initiative
As financial institutions increasingly rely on AI for customer service, fraud detection, credit scoring, and operational efficiencies, this initiative by the RBI is both timely and necessary. It ensures that AI adoption remains aligned with regulatory standards and ethical principles while fostering innovation.
This strategic move reflects the RBI’s proactive stance on emerging technologies and its commitment to creating a secure, inclusive, and responsible financial ecosystem driven by AI.
