RBI Governor Calls for India-Led AI Framework in Financial Sector

Reserve Bank of India (RBI) Governor Sanjay Malhotra stated on Tuesday that India must proactively shape its own artificial intelligence (AI) journey rather than letting the technology dictate the evolution of the financial sector. Speaking at the FIBAC 2026 conference, the central bank chief emphasized that passive adoption of AI could lead to unintended consequences for the nation's financial stability. He argued that a sovereign and deliberate approach to AI is necessary to ensure the technology aligns with India's unique socio-economic landscape and regulatory requirements.

The Governor highlighted that the integration of AI requires a fundamental transformation in how financial institutions operate. This shift involves rethinking traditional methods of evaluating risk, serving diverse customer bases, and pricing capital. Malhotra noted that AI tools must be harnessed to improve operational efficiency while maintaining strict oversight to prevent algorithmic bias or systemic vulnerabilities. He urged banks and non-banking financial companies (NBFCs) to reorganize their internal structures to effectively govern AI-driven decision-making processes and ensure transparency in automated outcomes.

The central bank's stance signals a move toward more structured regulatory frameworks for AI in India's rapidly growing fintech ecosystem. By emphasizing that India should not be shaped "by default," Malhotra suggested that the RBI may introduce more specific guidelines to ensure that AI deployments are ethical and secure. This development is critical for Indian startups and established banks that are currently investing heavily in AI for credit scoring and fraud detection. The focus now shifts to how these institutions will balance the Governor's call for transformation with the need for rapid innovation.