RBI to Set Up Committee for Ethical AI in Financial Sector

Mumbai, Dec 7 (KNN) In a pivotal move to address the risks and harness the potential of artificial intelligence (AI) in the financial sector, the Reserve Bank of India (RBI) announced the formation of a committee to create a Framework for Responsible and Ethical Enablement of AI (FREE-AI).

The initiative aims to mitigate challenges such as algorithmic bias, lack of explainability, and data privacy concerns.

The financial sector is undergoing a seismic transformation driven by frontier technologies like AI, Machine Learning (ML), tokenization, and cloud computing.

These technologies promise to revolutionise operations by enabling the analysis of massive data volumes, automating intricate processes, enhancing decision-making, and introducing efficiencies at an unprecedented scale.

“While the benefits are many, the attendant risks like algorithmic bias, explainability of decisions, and data privacy are also high,” the RBI said in its statement.

The central bank underscored the importance of addressing these risks early in the adoption cycle to ensure sustainable and ethical AI integration.

The proposed committee will include experts from diverse fields, ensuring a multidimensional approach to developing a robust and adaptable framework.

This framework will aim to balance innovation with ethical practices, safeguarding both financial institutions and consumers.

The initiative reflects the RBI’s proactive stance in navigating the complexities of AI integration.

It recognises the double-edged nature of advanced technologies and the necessity for guardrails to prevent unintended consequences.

Details about the committee’s composition and timeline for the release of the framework are expected to be notified shortly. This step reaffirms India’s commitment to fostering innovation while prioritising accountability and trust in its rapidly evolving financial ecosystem.

(KNN Bureau)