The Reserve Bank of India is urging financial institutions to accelerate investment in AI infrastructure, warning of cybersecurity risks and reliance on a few proprietary models or technology providers.
On August 11, 2569, at 13.03:XNUMX a.m., Bloomberg News reported that The Reserve Bank of India (RBI) is urging commercial banks to accelerate the adoption of artificial intelligence (AI). Through investments in technology and infrastructure, coupled with upskilling employees, financial institutions are warned that they must understand and comprehensively manage the risks from AI, especially cybersecurity and personal data.
Sanjay Malhotra, Governor of the Reserve Bank of India Speaking at an industry event in Mumbai, he said: Banks need to accelerate the adoption of AI to improve operational efficiency, but widespread adoption of such technology comes with several risks, ranging from potentially biased or non-transparent AI decision-making to data privacy risks and cyber threats.
Malhotra also warned of the risks of large numbers of banks relying on AI models or a few technology providers, which could cause the entire banking system to face similar errors or risks simultaneously. Banks should exercise caution when relying on external service providers.
"The banks that will win in the AI era are not necessarily the ones that adopt AI the fastest or the most, but rather those that adopt it with a thorough understanding of what the technology they are using is." Malhotra said.
This view reflects a key challenge facing the Indian financial sector, as banks rapidly adopt AI to increase efficiency and reduce costs. At the same time, this technology creates new vulnerabilities and enhances the capabilities of cyberattackers, forcing regulators to push for stricter safeguards, including human oversight.
before Indian Finance Minister Nirmala Sitharaman warned in April of the unprecedented risks from AI to the banking sector. The call also urged financial institutions to implement preventative measures, including securing their IT systems, protecting customer data and funds, and exchanging real-time information about threats.
This issue is not unique to India, as central banks worldwide are closely monitoring the use of AI by financial institutions amid concerns about cyberattacks, system failures, and operational collapse, as well as the risk that widespread adoption of similar technology or models could impact multiple banks simultaneously and cascade down to the stability of the financial system.
Beyond the risks related to AI and cybersecurity, malhotra also stated that Geopolitical and trade uncertainty is another significant risk to the Indian banking sector. However, he believes the country's central banks are still in a strong enough position to cope with these challenges, thanks to robust loan growth, low levels of non-performing loans, sufficient liquidity, and good profitability.
Malhotra also assessed that the Indian economy would be able to overcome the current challenges and return stronger, supported by resilient economic growth, controlled inflation, and high levels of foreign exchange reserves.
refer : www.bloomberg.com
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