RBI Forms 8-Member Panel to Address Ethical AI Usage

The Indian financial landscape is witnessing a pivotal development as the Reserve Bank of India (RBI) formally introduces an eight-member expert panel. This panel's primary objective is to craft a comprehensive framework for responsible and ethical artificial intelligence within the financial domain (FREE-AI). The announcement has sparked considerable interest and attention from various stakeholders.

The panel is headed by Professor Pushpak Bhattacharyya from the Department of Computer Science and Engineering at IIT Bombay. Under his guidance, the committee will conduct a thorough evaluation of the current state of AI adoption in both global and Indian financial services. This assessment will involve a detailed analysis of the current trends and the overall direction of the industry.

In addition to this, the committee will scrutinize the regulatory and supervisory approaches to AI in the global financial sector. By learning from international experiences, the committee aims to enhance India's AI regulatory framework. A significant part of their task is to identify potential risks associated with AI. They will develop a comprehensive framework for assessment, mitigation, and monitoring, along with compliance requirements, for financial institutions such as banks, non-bank financial companies, fintech firms, and payment system operators. This framework is designed to ensure that these institutions can navigate the AI landscape with stability and confidence.

The RBI has emphasized that the committee must propose a framework that encompasses governance aspects, ensuring that the adoption of AI models and applications in the Indian financial sector is conducted in a responsible and ethical manner. The committee includes distinguished members from various fields, such as Debjani Ghosh from the Reserve Bank Innovation Hub and Balaraman Ravindran from IIT Madras. The committee is expected to submit its detailed report within six months following its inaugural meeting. The establishment of this committee was announced by the RBI during its December monetary policy meeting.