Ethical use of AI in financial sector: RBI sets up Committee, Prof  Pushpak Bhattacharyya appointed chairperson

The Reserve Bank of India (RBI) has set up a Committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector. 

The Committee has been constituted as part of the statement on Developmental and Regulatory Policies released along with the Monetary Policy Statement dated December 6, 2024.

The Committee will be headed by Dr Pushpak Bhattacharyya, a professor at IIT Bombay’s Department of Computer Science and Engineering, as chairperson.

FinTech Department, Central Office, and Reserve Bank of India will provide secretarial support to the Committee. The Committee may also invite domain experts, industry representatives, RBI departments and other stakeholders, as may be required, for consultations and/or to participate in its deliberations.

The committee is expected to submit its report within six months from its first meeting, informed RBI.

The Terms of Reference of the Committee are as under:

(i) To assess the current level of adoption of AI in financial services, globally and in India.

(ii) To review regulatory and supervisory approaches on AI with focus on financial sector globally.

(iii) To identify potential risks associated with AI, if any and recommend an evaluation, mitigation and monitoring framework and consequent compliance requirements for financial institutions, including banks, NBFCs, FinTechs, PSOs, etc.

(iv) To recommend a framework including governance aspects for responsible, ethical adoption of AI models / applications in the Indian financial sector.

(v) Any other matter related to AI in the Indian financial sector.