RBI governor cautions against misuse of AI, ML

RBI Governor Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das on February 15 said global financial market regulators need to be vigilant about the possible misuse of artificial intelligence (AI) and machine learning (ML) in perpetrating financial fraudulence.

Addressing the 59th SEACEN Governors' Conference in Mumbai, he said that necessary safeguards need to be put in place to prevent the misuse of technology.

The world after the pandemic has changed fundamentally in terms of shifting labour market dynamics, work processes and technological deepening, Das said.

He further added that Work from home, online education and shopping have received wide acceptance, altering the way we work, learn and live.

"Technological innovation and digitalisation are permeating through every sector of the economy. Businesses are adapting to these trends for their survival," Governor said.

Frontier technologies like AI and ML are being used widely to boost productivity. These technologies open new opportunities, but they also present challenges that we need to address.

Last month, RBI Deputy Governor M Rajeshwar Rao has flagged concerns surrounding financial institutions using artificial intelligence.

Rao said that these concerns are design-specific risks such as biases and robustness issues, others are more traditional and user-specific such as data privacy, cybersecurity, consumer protection and preserving financial stability.

Rao said AI is as good as a the data on which is has been trained and thus inherits the issues, biases and errors in its training data. Human beings accumulate such training data over a lifetime of exposures, experiences, evidences, and upbringing. That makes us capable of coming to different conclusion based on the same data set.

Growth and inflation

RBI Governor further said prudent monetary and fiscal policies have paved the path for India’s success in sailing through these rough waters.

The Reserve Bank projects the Indian economy to grow by 7.0 per cent during 2024-25, marking the fourth successive year of growth at or above 7 per cent.

On inflation front, Das added that it has moderated from the highs of the summer of 2022. Recurring food price shocks and renewed flash points on the geo-political front, however, pose challenges to the ongoing disinflation process.

"We remain vigilant to navigate through the last mile of disinflation as it is often the most difficult part of the journey. We firmly recognise that stable and low inflation will provide the necessary bedrock for sustainable economic growth," Das said.