AI in Finance: RBI Deputy Governor T Rabi Sankar Urges Strong Oversight for Responsible AI

Artificial intelligence (AI) is reshaping industries at an unprecedented pace, but its adoption in finance comes with significant risks, warned Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar at the Global Fintech Fest (GFF) 2025 in Mumbai.

Speaking at a session titled “Responsible AI for Finance: Balancing Innovation with Financial Stability”, Sankar emphasized that while AI promises efficiency, inclusion, and innovation, its deployment must be paired with rigorous oversight to safeguard financial stability.

“AI is demonstrating its potential in ways unimaginable a few years ago. India has been an active participant in this journey. But, like all powerful innovations, AI carries a dual narrative of promise and peril,” he said.

AI in Finance: Safety at the Core

Sankar stressed that financial systems have little margin for error. Trust and stability are foundational to banking and markets, making responsible AI integration critical.

“AI systems must be designed with safety at their core. Oversight should be layered into the system from conception to deployment. Retrofitting safeguards later can be inadequate and even destabilizing,” he noted.

He urged that AI applications in financial services should not jeopardize market stability, payment systems, or consumer confidence, highlighting the RBI’s proactive approach to responsible AI adoption.

RBI’s MuleHunter.ai: A Case in Point

Citing RBI’s MuleHunter.ai, Sankar illustrated how AI can enhance financial security. Developed by the RBI Innovation Hub, MuleHunter.ai combats mule accounts and fraudulent accounts used in money laundering and cybercrime.

“Unlike traditional rule-based systems, MuleHunter delivers higher accuracy and lower false positive rates. It is currently deployed in around 20 commercial banks,” he said.

AI and Employment: Opportunity or Risk?

Addressing concerns about job losses, Sankar compared AI’s long-term impact to transformative technologies like the industrial revolution or the invention of electricity.

“Whether AI displaces jobs or creates new opportunities will depend on how effectively we govern and adapt to its use,” he added.

Key Takeaways:

AI offers efficiency, inclusion, and innovation but carries risks if unregulated.

Financial AI must be designed with safety and oversight at every stage.

RBI’s MuleHunter.ai demonstrates responsible AI deployment to prevent fraud.

Long-term employment impact depends on governance and adaptation.