RBI Sets Up FREE-AI Panel for Regulating AI in Financial Sector

The Reserve Bank of India (RBI) has launched a high-level committee to establish a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector. The initiative was unveiled alongside the December Monetary Policy Statement, underscoring the central bank’s commitment to balancing technological innovation with ethical governance.

Chaired by Pushpak Bhattacharyya, professor at IIT Bombay, the committee comprises notable figures from academia, government, and industry. Members include Debjani Ghosh, distinguished fellow at NITI Aayog and ex-NASSCOM President; Balaraman Ravindran, Head of IIT Madras’ Wadhwani School of Data Science and AI; and Abhishek Singh, Additional Secretary at the Ministry of Electronics and IT. Industry representatives from Microsoft India, HDFC Bank, and Trilegal also contribute their expertise.

The committee’s scope covers banks, non-banking financial companies (NBFCs), payment system operators (PSOs), and fintech entities. It will assess AI adoption in financial services domestically and globally, analyze regulatory frameworks, and identify risks associated with AI. Recommendations will include risk evaluation, mitigation strategies, and compliance frameworks to uphold ethical standards.

Key guidelines will be proposed for the responsible integration of AI models in India’s financial infrastructure, particularly catering to the growing fintech ecosystem. The RBI’s FinTech Department will provide secretarial support, and the committee is expected to deliver its report within six months of its inaugural meeting.

Through consultations with industry stakeholders and experts, the FREE-AI initiative aims to address the opportunities and challenges of AI, setting a benchmark for its ethical and sustainable use in the financial sector.