Human oversight will remain critical even as banks embrace AI, says RBI Governor Malhotra
Banks that adopt AI with the full understanding of what they are deploying, will win in the AI era, the RBI Governor felt.
- Aug 11, 2026,
- Updated Aug 11, 2026 2:21 PM IST
Banks in India need to invest in technology, IT infrastructure and reskilling if one is to accelerate artificial intelligence adoption, Reserve Bank of India Governor, Sanjay Malhotra said on Tuesday. At the same time, he stressed on the need to maintain a human oversight.
"The question now before us is whether you shape AI or you let it shape you," he pointed.
He noted that AI is not about one project or procurement of one technology, but a different way organising and doing things, and therefore it requires a lot of change in mindset.
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"The banks that will win in the AI era will not necessarily be the ones that adopt AI faster or the most. They will be the ones that adopt AI with the full understanding of what they are deploying.," Malhotra said in his address at the FICCI FIBAC conference in Mumbai.
The Governor pointed to the public digital infrastructure that India has built and felt that put India in a very strategic position when it came to AI.
"We in India stand at a unique vantage point to leverage AI. We have the most advanced public digital infrastructure, whether it is Aadhar, UPI, Digilocker or ONDC. We are trying to build, improve and expand unified lending interface and account aggregator," pointed Malhotra.
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AI has the potential to do for financial judgement, what UPI did for financial transactions, stressed Malhotra.
At the same time, the Governor also warned of the various risks associated with AI such as biases and exclusions as well as cyber security risks.
"A model trains on responsible lending data. If left unchecked, it will learn and perpetuate those biases. We need to be careful about these risks, the biases. We have to ensure that fairness in AI is not a compliance check box, it is a design requirement," stressed Malhotra.
He also called on banks to focus on security and data privacy. One cannot just be satisfied by complying with the digital personal data protection act and banks needed to do much more, he said.
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Importantly, he said that even as banks embrace AI, human oversight will remain crucial.
"No matter how sophisticated the model you may build, the ultimate responsibility has to lie with the bank and not with the vendor or algorithm. Meaningful human oversight, the ability to explain and intervene, and where necessary override, must remain a design principle," Malhotra added.
Banks in India need to invest in technology, IT infrastructure and reskilling if one is to accelerate artificial intelligence adoption, Reserve Bank of India Governor, Sanjay Malhotra said on Tuesday. At the same time, he stressed on the need to maintain a human oversight.
"The question now before us is whether you shape AI or you let it shape you," he pointed.
He noted that AI is not about one project or procurement of one technology, but a different way organising and doing things, and therefore it requires a lot of change in mindset.
MUST READ | RBI proposes ban on revolving credit by most NBFCs; only term loans to be allowed
"The banks that will win in the AI era will not necessarily be the ones that adopt AI faster or the most. They will be the ones that adopt AI with the full understanding of what they are deploying.," Malhotra said in his address at the FICCI FIBAC conference in Mumbai.
The Governor pointed to the public digital infrastructure that India has built and felt that put India in a very strategic position when it came to AI.
"We in India stand at a unique vantage point to leverage AI. We have the most advanced public digital infrastructure, whether it is Aadhar, UPI, Digilocker or ONDC. We are trying to build, improve and expand unified lending interface and account aggregator," pointed Malhotra.
DON'T MISS | RBI tightens loan recovery rules, bars harassment and strengthens borrower protection
AI has the potential to do for financial judgement, what UPI did for financial transactions, stressed Malhotra.
At the same time, the Governor also warned of the various risks associated with AI such as biases and exclusions as well as cyber security risks.
"A model trains on responsible lending data. If left unchecked, it will learn and perpetuate those biases. We need to be careful about these risks, the biases. We have to ensure that fairness in AI is not a compliance check box, it is a design requirement," stressed Malhotra.
He also called on banks to focus on security and data privacy. One cannot just be satisfied by complying with the digital personal data protection act and banks needed to do much more, he said.
MUST READ | RBI keeps Repo Rate unchanged. Should investors choose FDs or small savings schemes?
Importantly, he said that even as banks embrace AI, human oversight will remain crucial.
"No matter how sophisticated the model you may build, the ultimate responsibility has to lie with the bank and not with the vendor or algorithm. Meaningful human oversight, the ability to explain and intervene, and where necessary override, must remain a design principle," Malhotra added.