The Reserve Bank of India (RBI) has announced the composition and scope of work for the expert committee for an ethical artificial intelligence (AI) framework.
In December, the RBI announced its plans to set up a committee to develop a framework for the ethical enablement of AI for the finance sector. The committee, comprising experts from diverse fields, is tasked to recommend an adaptable and robust AI framework for the financial sector.
In a statement, the RBI announced the composition of the committee on FREE-AI (Framework for Responsible and Ethical Enablement of Artificial Intelligence). The committee will be led by Pushpak Bhattacharyya, a Computer Science and Engineering professor at the Indian Institute of Technology (IIT) Bombay, one of India’s premier technology institutes.
The RBI also constituted committee members, including Balaraman Ravindran, a professor and head of data science and AI at IIT Madras; Sree Hari Nagaralu, head of security AI research at Microsoft India (NASDAQ: MSFT); Suvendu Pati, an official of the RBI; Anjani Rathor, Group Head and Chief Digital Experience Officer at HDFC Bank (NASDAQ: HDB); as well as Abhishek Singh, Additional Secretary, Ministry of Electronics and Information Technology, Government of India.
The committee will submit its report within six months from the date of its first meeting, RBI said in the statement. The committee may also invite domain experts, industry representatives, RBI departments, and other stakeholders, as may be required, to consult and participate in its deliberations.
The finance technology department of the RBI will equip the committee with secretarial support.
The central bank also announced “terms of reference,” or scope of work, for the committee. These include assessing the current level of adoption of AI in financial services, globally and in India; reviewing regulatory and supervisory approaches on AI with a focus on the financial sector globally; as well as recommending a framework including governance aspects for responsible, ethical adoption of AI models and their applications in the Indian financial sector.
The committee is also tasked with identifying potential risks associated with AI and recommending an evaluation, mitigation and monitoring framework and consequent compliance requirements for financial institutions, including banks, non-banking financial companies (NBFCs), FinTechs, and payment system operators.
In his December Monetary Policy statement, RBI’s former Governor Shaktikanta Das highlighted the financial sector’s rapid transformation, driven by technologies like AI, tokenization, and cloud computing. He also emphasized the need to harness these technologies’ benefits while addressing risks such as algorithmic bias, explainability, and data privacy.
The RBI’s initiative comes as generative AI (GenAI) is projected to add $359-438 billion to India’s gross domestic product (GDP) by 2029-2030, highlighting the need for ethical and responsible use of the technology to support the country’s economic growth and financial sector.
The RBI has also introduced an artificial intelligence/machine learning (AI/ML)-based model, MuleHunter.AI, developed by the Reserve Bank Innovation Hub (RBIH), to tackle digital fraud. The AI model is also expected to help banks deal with the issue of mule bank accounts, a typical tactic fraudsters use to funnel the proceeds of their fraudulent activities.
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