RBI chief urges banks to keep humans in charge of AI decisions

At the annual Fibac gathering in India's financial hub, Reserve Bank governor Sanjay Malhotra warned banks that responsibility for AI-generated decisions must rest with the institution itself, not with the software or its supplier. He urged lenders to embed robust human oversight into AI tools right from their conception, ensuring staff can interpret, intervene in or overrule outcomes. While promoting AI as a capability to enhance human work, he cautioned that over-reliance could erode judgment and accountability.

Malhotra highlighted emerging risks such as cyber attacks targeting AI systems, model bias against certain regions or groups, and the danger of a few vendors creating a homogeneous, herding effect across the sector. He asked banks to maintain a complete inventory of deployed models and adopt board-approved AI governance policies. Finally, he stressed that data privacy and risk management must go beyond mere regulatory compliance.