The Reserve Bank of India (RBI) is set to create a comprehensive framework for responsible and ethical adoption of artificial intelligence (AI) in the financial sector during the 2025–26 financial year, according to its 2024–25 annual report.

The move comes amid rapid advancements in AI and machine learning (ML), propelled by improved computing power and access to large-scale digital data. Financial institutions across India and globally are increasingly integrating these technologies into their operations.

To guide this transformation responsibly, the RBI formed an external expert committee in December 2024. Its mandate: to recommend policies that enable ethical AI use while safeguarding systemic integrity.

The RBI itself is already experimenting with AI/ML-based solutions for internal functions. In parallel, it is planning to launch an AI Governance Policy that outlines ethical usage standards for its staff, external vendors, and partners. This policy will address data handling, user consent, and security protocols, ensuring AI tools align with the bank’s core values and operational integrity.

As part of a broader regulatory update, the RBI aims to:

  • Strengthen supervision of banking and non-banking entities;

  • Harmonise regulations across financial institutions;

  • Enhance liquidity stress tests for commercial banks;

  • And leverage AI to improve complaint resolution and grievance redress systems.

    • With this initiative, the RBI signals a proactive approach to both embracing innovation and ensuring ethical safeguards, setting a precedent for AI governance in India’s financial ecosystem.

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