RBI sets up expert panel to craft ethical AI framework for financial sector

It will also review regulatory and supervisory approaches on AI with focus on the financial sector globally.

The Reserve Bank of India (RBI) has constituted a high-level committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector.

The initiative, announced in the Monetary Policy Statement on December 6, 2024, underscores the central bank's focus on fostering responsible AI innovation while addressing associated risks.

The committee, chaired by Pushpak Bhattacharyya, Professor at IIT Bombay, brings together leading experts from academia, industry, and government. Its key objective is to establish a governance framework to guide ethical AI adoption across financial institutions, including banks, non-banking financial companies (NBFCs), Fintechs, and payment system operators (PSOs), the circular issued on December 26 notes.

The panel comprises Debjani Ghosh, Distinguished Fellow at NITI Aayog and former NASSCOM President; Balaraman Ravindran, Head of the Wadhwani School of Data Science and AI at IIT Madras; Abhishek Singh, Additional Secretary at the Ministry of Electronics and IT; Rahul Matthan, Partner at Trilegal; Anjani Rathor, Chief Digital Experience Officer at HDFC Bank; and Hari Nagaralu, Head of Security AI Research at Microsoft India.

Suvendu Pati, CGM of RBI’s FinTech Department, will act as the Member Secretary.

The committee has been tasked with assessing the current state of AI adoption in financial services, both globally and domestically, and reviewing international regulatory and supervisory practices. It will identify risks associated with AI, propose mechanisms for risk evaluation and mitigation, and recommend a comprehensive governance framework for ethical AI use in the Indian financial sector.

RBI’s Fintech Department will provide secretarial support to the committee, which can also invite domain experts and industry representatives for consultations, per the framework.

The panel is expected to submit its report within six months of its first meeting.