Mumbai (Maharashtra) [India] October 8, (ANI): Artificial intelligence (AI) is transforming industries with unprecedented speed, but it also poses serious risks if left unchecked, said Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar on Tuesday.
Addressing the Global Fintech Fest (GFF) 2025 in Mumbai, he cautioned that while AI promises extraordinary efficiency, inclusion, and innovation, it must be accompanied by rigorous oversight to safeguard financial stability.
"AI is demonstrating its ability in ways unimaginable a few years back. India, too, has been a notable participant in this journey. But as with all powerful innovations, AI carries a dual narrative of promise and peril," Sankar said, speaking at a session on 'Responsible AI for Finance: Balancing Innovation with Financial Stability' at Global Fintech Summit 2025 at Mumbai.
He stressed that the integration of AI into financial systems must be treated with profound responsibility. "In finance, the margin for error is narrower, as financial institutions are built on trust and economies prosper on stability," he said. RBI Deputy Governor added, AI in financial services should be designed with safety at its core, not as an afterthought.
"AI systems must be subjected to rigorous oversight and layered with inherent checks. Financial AI applications, in particular, must not be allowed to destabilize markets, payment systems, or consumer confidence. Safety must be built into the design from conception to real-world deployment. Retrofitting safeguards later can be inadequate and even destabilizing," he noted.
Sankar underlined Central Bank's focus on ensuring that technological advancement aligns with financial prudence. Citing the example of RBI's own innovations, he spoke about 'MuleHunter.ai', a system developed by the RBI Innovation Hub to combat the growing menace of mule accounts and fraudulent accounts used for money laundering and cybercrime.
"Unlike the traditional rule-based systems currently used, MuleHunter offers greater accuracy and precision with significantly lower false positive rates. The model has already been deployed in about 20 commercial banks," he said.
Responding to concerns about job displacement due to AI, Sankar said that its long-term impact would depend on whether it follows the trajectory of past transformative technologies like the industrial revolution or the invention of electricity. "Whether AI displaces jobs or creates new opportunities will hinge on how we adapt and govern its use," he added. (ANI)