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RBI Panel Proposes Framework AI in Financial Sector
Context:
The RBI-appointed committee has submitted its Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) report, recommending 26 measures under six strategic pillars to enable innovation and mitigate AI-related risks in the financial sector.
Committee Objective:
- To develop guidelines for the ethical, responsible, and innovative adoption of AI in the Indian financial sector.
Guiding Principles – “7 Sutras”:
- Trust is the Foundation
- People First
- Innovation over Restraint
- Fairness and Equity
- Accountability
- Understandable by Design
- Safety, Resilience, and Sustainability
Strategic Pillars:
- Innovation Enablement: Infrastructure, Policy, and Capacity
- Risk Mitigation: Governance, Protection, and Assurance
Key Recommendations:
- Establishment of shared infrastructure to democratise access to data and computing resources.
- Creation of an AI Innovation Sandbox.
- Development of indigenous, sector-specific AI models for finance.
- Formulation of board-approved AI policies by Regulated Entities (REs).
- Integration of AI aspects in product approval processes and consumer protection frameworks.
- Strengthening cybersecurity and AI-related incident reporting
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