The Reserve Bank of India (RBI) has proposed new guidelines requiring banks and other regulated entities to strengthen the management of risks associated with artificial intelligence (AI) and machine learning (ML) models.
Under the proposed framework, regulated entities will be required to implement a board-approved risk management policy covering all models used within the organisation, including AI and machine learning systems. The framework aims to establish stronger governance, oversight, and accountability around the use of advanced technologies in financial services.
The RBI has also proposed that institutions maintain comprehensive model inventories and implement robust controls to monitor model performance, risks, and outcomes. Regulated entities will be expected to assess risks not only at the individual model level but also across the enterprise on an ongoing basis.
The proposed guidelines reflect the growing adoption of AI and machine learning across the banking sector and seek to ensure that innovation is supported by appropriate governance, transparency, and risk management practices.
By strengthening oversight of AI-driven systems, the RBI aims to promote responsible technology adoption while enhancing the resilience, stability, and risk management capabilities of the financial sector.
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