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RBI – 7 Sutras for AI Adoption in Financial Sector

14 Aug 2025 GS 3 Economy
RBI – 7 Sutras for AI Adoption in Financial Sector Click to view full image

Background

  • Committee: Set up by RBI to develop Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector.

  • The central bank established the committee in December chaired by Pushpak Bhattacharyya to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREEAI) for the finance sector

  • Aim: Harness AI potential while mitigating risks.

  • Report: Uploaded on RBI website, outlines 7 Sutras and 26 actionable recommendations under 6 strategic pillars.

Seven Sutras (Foundational Principles)

  1. Trust is the Foundation

  2. People First

  3. Innovation over Restraint

  4. Fairness and Equity

  5. Accountability

  6. Understandable by Design

  7. Safety, Resilience and Sustainability

Approach

  • Treat innovation and risk mitigation as complementary forces.

  • Unified vision spread across 6 Strategic Pillars.

Six Strategic Pillars

  1. Innovation Enablement

    • Infrastructure

      • Establish shared infrastructure to democratise access to data and compute.

    • Policy

      • Create AI Innovation Sandbox.

      • Develop indigenous financial sector-specific AI models.

    • Capacity

      • Build AI-related skill base in financial sector.

  2. Risk Mitigation

    • Governance

      • Board-approved AI policy by Regulated Entities (REs).

      • Expand product approval processes to include AI aspects.

    • Protection

      • Consumer protection frameworks for AI-based products.

      • AI-specific audits.

    • Assurance

      • Augment cybersecurity practices.

      • Strengthen incident reporting frameworks.

Key Recommendations (Examples)

  • Democratise data access through shared infrastructure.

  • Develop AI Innovation Sandbox for experimentation.

  • Indigenous AI models tailored to Indian financial sector needs.

  • AI policy at board level for all regulated entities.

  • AI-specific consumer protection and audit mechanisms.

  • Enhanced cybersecurity and reporting norms for AI incidents.



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