MUMBAI: RBI governor Shaktikanta Das cautioned against unchecked use of artificial intelligence and machine learning in banking, saying it poses risks like market concentration, systemic instability, and increased vulnerability to cyberattacks.
“Heavy reliance on AI can lead to concentration risks, especially when a small number of tech providers dominate the market.This could amplify systemic risks, as failures or disruptions in these systems may cascade across the entire financial sector. Moreover, the growing use of AI introduces new vulnerabilities, such as increased susceptibility to cyberattacks and data breaches,” Das said. The governor was delivering the keynote address at the RBI@90 High-Level Conference, organised by the central bank in New Delhi on Monday.
Das called upon banks and other financial institutions to put in place adequate risk mitigation measures against these risks. “In the ultimate analysis, banks have to ride on the advantages of AI and Big Tech and not allow the latter to ride on them,” he said. The governor’s caution comes at a time when the payment landscape is dominated by two players – Google Pay and Wal Mart-owned PhonePe. The two companies are distributing loans through their apps.
In his speech, Das also proposed expanding India’s real-time gross settlement (RTGS) system to settle transactions in major trade currencies such as the dollar, euro, and pound through bilateral or multilateral arrangements. This extends RBI’s existing tie-ups with other authorities for linking fast-payment systems for retail transactions.
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