Regulators need to be nimble with AI experimentation, says NITI Aayog CEO

BVR Subrahmanyam, CEO, NITI Aayog

India has got the scale to move quickly on artificial intelligence (AI), but to enable that regulators have to be nimble during experimentation, NITI Aayog Chief Executive Officer BVR Subrahmanyam said at the Global Fintech Fest (GFF) 2025 in Mumbai.

His comments reflect the ongoing rift between the fintech industry and the regulators as these stakeholders attempt to innovate and digitise financial services while adhering to guardrails of regulations.

Speaking of how AI will impact the fintech sector, the chief of the apex public policy think tank of the Indian government said, “In the context of fintechs, because India has got the scale, technological capacity, and it has the digital base which is quite large, India should move very fast on AI. In a way, come up with new products, new processes, new ways of doing things to deliver a variety of services which the financial sector consumers need.”

According to him, AI can transform financial areas such as insurance, savings instruments, investment instruments, and a whole host of products. Subrahmanyam was in conversation with CRED founder Kunal Shah.

He highlighted that while there is a vast scope to innovate using AI, this would also mean “constant tussle” between regulators and the fintech sector. “This stress is built into the system. Regulators have to take care to see that there is no harm, and innovators have to keep generating value.”

“When you integrate AI, bring in new systems and processes, the current systems and checks and balances won't know how to handle that…We probably need to create regulatory sandboxes. To allow the experimentation also we have not been very creative. We need to do much, much more. Regulators need to be nimble with it,” he said.

Subrahmanyam suggested that for better financial regulatory systems in place, there needs to be a shift from institution-based regulations to activity-based regulations.  "The government is quite aligned to this. The finance ministry and the regulators are in deep conversations to see how this can happen."