RBI Launches Committee To Establish Ethical Framework For AI In Finance

On Thursday, the Reserve Bank disclosed the formation of a new committee, tasked with the creation of a framework for the responsible and ethical use of artificial intelligence (AI) within the financial sector. This initiative, known as the Framework for Responsible and Ethical Enablement of AI (FREE-AI), is spearheaded by Professor Pushpak Bhattacharyya from the Department of Computer Science and Engineering at IIT Bombay. The committee's mission is to explore the current application of AI in financial services, both in India and around the world. It aims to evaluate the risks AI might pose and suggest strategies for their evaluation, mitigation, and monitoring.

This eight-member panel is not only focused on assessing the present use of AI but also on examining the regulatory and supervisory frameworks surrounding AI globally, particularly within the financial sector. Their task is to develop a comprehensive framework that covers governance for the ethical adoption of AI technologies in Indian financial institutions. This includes banks, non-banking financial companies (NBFCs), fintech firms, payment system operators (PSOs), among others.

The committee boasts a diverse lineup of experts, including Debjani Ghosh, an Independent Director at the Reserve Bank Innovation Hub, and Balaraman Ravindran, a professor at the Wadhwani School of Data Science and AI at IIT Madras. Other notable members are Abhishek Singh, the Additional Secretary at the Ministry of Electronics and Information Technology, Rahul Matthan, a partner at Trilegal, Anjani Rathor, the Group Head and Chief Digital Experience Officer at HDFC Bank, Sree Hari Nagaralu, the Head of Security AI Research at Microsoft India, and Suvendu Pati, the CGM at the FinTech Department of the RBI.

This high-caliber team is expected to deliver their findings and recommendations within six months following their initial meeting, as stated by the Reserve Bank. The announcement of this committee was part of the discussions in the central bank's December monetary policy meeting. Through this move, the RBI aims to ensure that the integration of AI in the financial sector not only enhances efficiency and innovation but is also aligned with ethical standards and responsible governance.