RBI Governor Urges Indian Banks to Accelerate AI Adoption

Reserve Bank of India Governor Sanjay Malhotra urged Indian financial institutions to accelerate the adoption of artificial intelligence by investing in technology, infrastructure, and worker upskilling. Speaking at industry events in Mumbai and at the FIBAC 2026 conference in New Delhi, Malhotra stated that AI integration requires a total change in mindset regarding risk evaluation, customer service, and operational organization. He highlighted India's strategic advantage through public digital infrastructure like UPI and Aadhaar, which could allow AI to transform financial judgment.

Malhotra warned that AI introduces systemic risks, including biased decision-making, data privacy breaches, and cybersecurity threats. He specifically cautioned against over-reliance on a small number of technology vendors. Despite these vulnerabilities, Malhotra noted that the banking sector remains well-positioned due to healthy liquidity and low bad loans.

State Bank of India Chairman Challa Sreenivasulu Setty supported the expansion of AI, arguing it should move beyond retail banking to reach rural India and small businesses. Setty highlighted agriculture as a primary opportunity for data-driven risk assessment using satellite imagery. He emphasized that while AI is a tool for economic development, banks must strengthen defenses against sophisticated fraud and maintain human accountability for consequential decisions.