RBI sets up 8-member panel for ethical AI framework

The Reserve Bank of India has formed an eight-member committee to create a framework for the responsible and ethical implementation of artificial intelligence in the financial sector. This initiative, called the Framework for Responsible and Ethical Enablement of AI (FREE-AI), aims to ensure that AI technologies are applied appropriately in financial services while addressing potential risks and regulatory concerns.

The committee will be chaired by Professor Pushpak Bhattacharyya from IIT Bombay’s Department of Computer Science and Engineering. Its mandate includes evaluating the current adoption of AI in financial services, both globally and within India. The panel will also review existing regulatory and supervisory frameworks for AI in the financial sector, drawing insights from global practices.

A primary focus of the committee’s work will be identifying risks associated with AI applications in the financial industry. The panel will propose a comprehensive framework for evaluating, mitigating, and monitoring these risks, along with establishing compliance requirements for financial institutions such as banks, non-banking financial companies (NBFCs), fintech firms, and payment system operators.

Additionally, the committee will develop guidelines on governance for the ethical and responsible use of AI models and applications within India’s financial ecosystem. The goal is to ensure that AI adoption in the sector is done transparently, securely, and in alignment with ethical standards.

The members of the committee include notable experts from various fields. In addition to Bhattacharyya, the panel features Debjani Ghosh (Independent Director, RBI Innovation Hub), Balaraman Ravindran (Professor, IIT Madras), Abhishek Singh (Additional Secretary, Ministry of Electronics and Information Technology), Rahul Matthan (Partner, Trilegal), Anjani Rathor (HDFC Bank), Sree Hari Nagaralu (Microsoft India), and Suvendu Pati (CGM, RBI FinTech Department).

The committee is expected to submit its final report within six months from its first meeting, as announced by the RBI during its December monetary policy meeting.