Bengaluru: The Reserve Bank of India (RBI) has warned that cyber incidents, particularly those powered by artificial intelligence (AI), pose an increasing threat to the country’s financial system, with the potential to disrupt critical infrastructure, interrupt payment systems, cause data loss and undermine public confidence.
The warning was issued in the RBI’s recently released Financial Stability Report, which noted that India continues to face a high volume of cyberattacks compared with several other emerging market economies. The report identified AI-enabled cyber threats as the leading perceived cybersecurity risk over the next year.
The central bank said strengthening cyber resilience has become essential as financial institutions accelerate digital transformation and adopt AI across banking and financial services.
AI-powered cyber threats on the rise
According to the RBI, cybercriminals are increasingly using artificial intelligence to launch sophisticated attacks that are more difficult to detect and prevent.
The report warned that cyber incidents can disrupt financial infrastructure through service outages, payment system interruptions and data breaches, while also eroding trust in the country’s financial ecosystem.
Industry experts believe that financial institutions must prepare for the next generation of cyber threats by strengthening both technology and operational safeguards.
Experts call for stronger AI-based security
Mandar Patil, Executive Vice President at AI-native cybersecurity firm Cyble, said the RBI’s warning comes at an important time as cyberattacks targeting Indian networks continue to increase rapidly.
He noted that cybercriminals are now using AI tools to create convincing voice impersonations through voice synthesis, generate realistic video deepfakes, craft sophisticated phishing emails and launch more complex ransomware attacks.
According to Patil, these attacks are becoming increasingly difficult to identify using conventional cybersecurity measures.
As banks and financial institutions adopt AI to improve customer service, automate operations and strengthen digital banking channels, they must also invest in AI-driven cybersecurity solutions capable of detecting emerging threats in real time.
Need for comprehensive cybersecurity measures
Experts say AI-based cybersecurity should form part of a broader security framework rather than functioning as a standalone solution.
Patil emphasised that financial institutions should strengthen identity verification systems, implement real-time fraud detection mechanisms and continuously monitor financial transactions to identify suspicious activity.
He also highlighted the importance of regular security assessments, employee awareness programmes and robust cybersecurity governance.
According to him, cybersecurity is no longer solely the responsibility of information technology departments but has become a business-wide priority requiring participation from all organisational levels.
Building public trust in India’s rapidly expanding digital financial ecosystem will depend on the industry’s ability to effectively respond to increasingly sophisticated AI-powered cyber threats, he added.
RBI survey highlights strengths and gaps
The Financial Stability Report also referred to a survey conducted among major Indian banks and non-banking financial companies (NBFCs).
The survey found that most financial institutions have established strong cyber risk management practices, particularly in conducting vulnerability assessments and penetration testing of critical information systems.
The RBI also observed that regulatory reporting systems and board-level oversight of major cyber incidents have improved significantly in recent years.
However, the central bank identified employee awareness and cybersecurity training as areas requiring further improvement.
It noted that human behaviour continues to be one of the most commonly exploited entry points for cybercriminals, making staff education and awareness essential components of cyber risk management.
Balancing AI adoption with operational resilience
Rohit Mahajan, Founder and Chief Executive Officer of plutos ONE, said artificial intelligence is expected to play a transformative role in the future of banking.
At the same time, he cautioned against excessive dependence on AI, noting that banks should maintain contingency plans to ensure business continuity if AI systems become unavailable or compromised.
Mahajan said financial institutions should gradually build AI capabilities while ensuring that critical banking operations can continue through alternative mechanisms whenever necessary.
He added that the RBI’s long-term vision encourages banks to embrace AI responsibly while maintaining strong operational resilience and risk management practices.
Digital finance requires stronger safeguards
India has witnessed rapid growth in digital payments, online banking and financial technology services over the past decade, increasing the importance of cybersecurity across the financial sector.
With banks increasingly relying on AI to automate services, improve customer experience and detect fraud, experts believe cybersecurity investments must keep pace with technological advancements.
The RBI’s latest warning highlights the need for financial institutions to strengthen technical safeguards, improve employee awareness and adopt AI-powered defence mechanisms to counter evolving cyber threats.
As digital financial services continue to expand, the central bank has emphasised that maintaining cybersecurity resilience will be critical to protecting financial stability and preserving public confidence in India’s banking system.