Need stronger guardrails against Agentic AI risks: FM

“As we rapidly progress into the era of Agentic AI, tokenisation, and quantum computing, we all need to ask a critical question to ourselves: how do we balance breakthrough efficiency against emerging systemic risk?” Sitharaman said, addressing the 7th Global Fintech Fest 2026 in Mumbai,

Acknowledging the transformative potential of these technologies, she noted that tokenisation can remove unnecessary intermediaries and make asset transfers almost instantaneous, while Agentic AI can move beyond recommendations to taking direct actions, compressing processes that once took days into seconds. Quantum computing promises computing capabilities and security protocols that were previously considered impossible, she said.

However, Sitharaman cautioned that greater speed can also accelerate failures and vulnerabilities. “When decisions and transactions become instantaneous, software errors, fraud, and market shocks can spread at the same rapid pace,” she said.

Terming AI a “double-edged sword”, she said the technology can help detect fraud faster while simultaneously enabling attackers to automate larger and more sophisticated cyberattacks. The emergence of quantum computing also means traditional security and encryption systems will need to be upgraded before existing defences become obsolete.

“Our goal should be neither to block innovation out of fear nor to let speed compromise safety,” Sitharaman said. Instead, she called for a distinction between unnecessary operational friction and safeguards that are essential to protecting financial and technological systems.

“The policy challenge is straightforward: Can we build systems that are fast yet accountable, autonomous yet reversible when mistakes occur, and innovative without diluting consumer trust?” she asked.

Sitharaman stressed that responsibility for AI cannot be left solely to technology teams. “AI may assist judgment, but responsibility must remain human and institutional,” she said, adding that the more serious the consequences of a decision, the greater the need for review, explanation and appeal.

She also called for closer coordination among financial regulators, competition authorities, data-protection bodies and cybersecurity agencies, warning that activities should not escape oversight simply because they operate across sectors or through technology platforms. On the broader fintech ecosystem, Sitharaman said India must combine innovation with stronger standards and responsible growth. “Where the regulator’s writ ends, your own standards must begin,” she said.

She urged the industry to measure success not only through users, transactions and valuations, but also through “the trust we earn, the problems we solve, and the resilience we build”.

“We need to allow technology to move. Allow innovation to accelerate. But we cannot allow the human element—the ability to question, correct, restrain and take responsibility—to be lost along the way,” Sitharaman added.