Artificial Intelligence (AI) can make banking faster, safer and more inclusive, but it must not weaken fairness, accountability or trust, RBI Deputy Governor Swaminathan J recently said. Speaking at the V Narayanan Memorial Lecture at SASTRA University in Thanjavur, he said AI is reshaping how financial institutions serve customers, assess credit, detect fraud and manage risks.
He said AI can help simplify customer service through multilingual chatbots and voice-based tools, improve credit access for small businesses and first-time borrowers, and strengthen fraud detection by spotting unusual patterns in large volumes of data. It can also support better supervision by helping analyse information more efficiently.
However, he flagged key risks such as-biased outcomes if AI systems rely on flawed data, lack of transparency in decision-making, misuse of sensitive financial data, model failures affecting large numbers of customers, and rising cyber threats.
He said banks and non-banking finance companies (NBFCs) cannot shift responsibility to machines. “A decision that materially impacts a citizen’s economic life cannot be defended by saying, ‘the machine decided,’” he said.
Swaminathan outlined five principles for responsible use of AI. These were human accountability, fairness and explainability, strong data governance, better institutional capacity, and a clear focus on inclusion. He said the real test for AI in India’s financial sector is whether it advances inclusion, improves efficiency and strengthens trust.
“The enduring task, therefore, is to make finance more intelligent, without making it less human; to make it more digital, without making it less accountable; and to make it more inclusive, without making it less prudent,” he said.