RBI Sets Up Panel To Build AI Framework For Fintechs

SUMMARY

The panel will work on developing a framework for responsible and ethical enablement of artificial intelligence (FREE-AI) in the financial sector

The appointed committee will assess AI penetration in the financial sector domestically as well as globally

Additionally, it will also work on identifying and providing solutions for any potential risk associated with AI in the fintech segment

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.

To execute the development of FREE-AI, the appointed committee will assess AI penetration in the financial sector domestically as well as globally, said the authority in a statement.

Additionally, it will also work on identifying and providing solutions for any potential risk associated with AI in the financial sector. The committee is responsible for making a framework for ethical adoption of AI models in this sector.

The committee, which is chaired by IIT Bombay’s professor Pushpak Bhattacharyya, consists of seven other members including IT ministers, professors and businessmen. It has been instructed to submit a report after six months of its first meeting.

The initiative was announced earlier this month, along with the Monetary Policy Statement, which was released on December 6.

Back then, the regulatory body said that the committee will deal with critical challenges such as algorithmic bias, decision explainability, and data privacy, while also laying out a roadmap for sustainable AI integration.

Along with this, the RBI also introduced an AI/ML-based model called MuleHunter.AI to detect mule bank accounts. Besides, it also enabled small finance banks (SFBs) to offer pre-sanctioned credit lines through the Unified Payments Interface (UPI).

This comes at a time when RBI is aggressively rolling out initiatives to increase digital payments in the country.

For instance, earlier this month, the central bank increased the wallet limit for UPI Lite to INR 5,000 from INR 2,000 previously. Additionally, the offline transaction limit for UPI Lite service was increased to INR 1,000 per transaction from INR 500 previously.

Back in July, RBI also proposed alternate methods of additional factor of authentication (AFA) for digital transactions to strengthen the security aspect in this segment.