RBI Forms FREE-AI Committee to Develop Responsible AI Framework for Financial Sector
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[1]
RBI sets up panel on responsible AI in banking
The Reserve Bank of India has formed an eight-member panel called FREE-AI, led by Pushpak Bhattacharyya of IIT Bombay, to develop a framework for responsible and ethical AI in the financial sector. The committee will review AI adoption, regulatory approaches, and recommend governance and risk mitigation frameworks within six months.The Reserve Bank of India on Thursday announced the setting up of an eight member panel to develop the framework for responsible and ethical enablement of artificial intelligence. The committee called FREE-AI will be headed by Pushpak Bhattacharyya from the Department of Computer Science and Engineering, IIT Bombay. The committee, which will be supported by the RBI's fintech department, will be required to submit its report within six months from the date of its first meeting. The committee's mandate will be to study the present level of AI adoption in financial services and review regulatory and supervisory approaches on AI with focus on the financial sector globally. The committee will also recommend a framework including governance aspects for responsible, ethical adoption of AI models for the financial sector. The committee will also have to identify potential risks associated with AI and recommend an evaluation, mitigation and monitoring framework for regulated entities. Apart from IIT Bombay's Bhattacharya, the committee also includes Suvendu Pati, CGM, RBI, Abhishek Singh, Additional Secretary, Ministry of Electronics and Information Technology, Debjani Ghosh, independent director for Reserve Bank Innovation Hub, Dr. Balaraman Ravindran of IIT Madras, Rahul Matthan, Partner, Trilegal and Anjani Rathor, Chief Digital Officer, HDFC Bank among others.
[2]
RBI announces 'FREE-AI' committee to develop AI framework
The Reserve Bank of India has formed an eight-member panel called FREE-AI, led by Pushpak Bhattacharyya of IIT Bombay, to develop a framework for responsible and ethical AI in the financial sector. The committee will review AI adoption, regulatory approaches, and recommend governance and risk mitigation frameworks within six months.The Reserve Bank of India on Thursday announced the setting up of an eight member panel to develop the framework for responsible and ethical enablement of artificial intelligence. The committee called FREE-AI will be headed by Pushpak Bhattacharyya from the Department of Computer Science and Engineering, IIT Bombay. The committee, which will be supported by the RBI's fintech department, will be required to submit its report within six months from the date of its first meeting. The committee's mandate will be to study the present level of AI adoption in financial services and review regulatory and supervisory approaches on AI with focus on the financial sector globally. The committee will also recommend a framework including governance aspects for responsible, ethical adoption of AI models for the financial sector. The committee will also have to identify potential risks associated with AI and recommend an evaluation, mitigation and monitoring framework for regulated entities. Apart from IIT Bombay's Bhattacharya, the committee also includes Suvendu Pati, CGM, RBI, Abhishek Singh, Additional Secretary, Ministry of Electronics and Information Technology, Debjani Ghosh, independent director for Reserve Bank Innovation Hub, Dr. Balaraman Ravindran of IIT Madras, Rahul Matthan, Partner, Trilegal and Anjani Rathor, Chief Digital Officer, HDFC Bank among others.
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RBI Sets Up FREE-AI Panel for Regulating AI in Financial Sector
Chaired by Pushpak Bhattacharyya, professor at IIT Bombay, the committee comprises notable figures from academia, government, and industry. The Reserve Bank of India (RBI) has launched a high-level committee to establish a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector. The initiative was unveiled alongside the December Monetary Policy Statement, underscoring the central bank's commitment to balancing technological innovation with ethical governance. Chaired by Pushpak Bhattacharyya, professor at IIT Bombay, the committee comprises notable figures from academia, government, and industry. Members include Debjani Ghosh, distinguished fellow at NITI Aayog and ex-NASSCOM President; Balaraman Ravindran, Head of IIT Madras' Wadhwani School of Data Science and AI; and Abhishek Singh, Additional Secretary at the Ministry of Electronics and IT. Industry representatives from Microsoft India, HDFC Bank, and Trilegal also contribute their expertise. The committee's scope covers banks, non-banking financial companies (NBFCs), payment system operators (PSOs), and fintech entities. It will assess AI adoption in financial services domestically and globally, analyze regulatory frameworks, and identify risks associated with AI. Recommendations will include risk evaluation, mitigation strategies, and compliance frameworks to uphold ethical standards. Key guidelines will be proposed for the responsible integration of AI models in India's financial infrastructure, particularly catering to the growing fintech ecosystem. The RBI's FinTech Department will provide secretarial support, and the committee is expected to deliver its report within six months of its inaugural meeting. Through consultations with industry stakeholders and experts, the FREE-AI initiative aims to address the opportunities and challenges of AI, setting a benchmark for its ethical and sustainable use in the financial sector.
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RBI Sets Up Panel To Build AI Framework For Fintechs
Additionally, it will also work on identifying and providing solutions for any potential risk associated with AI in the fintech segment The Reserve Bank of India (RBI) has set up a committee to develop a framework for responsible and ethical enablement of artificial intelligence (FREE-AI) in the financial sector. To execute the development of FREE-AI, the appointed committee will assess AI penetration in the financial sector domestically as well as globally, said the authority in a statement. Additionally, it will also work on identifying and providing solutions for any potential risk associated with AI in the financial sector. The committee is responsible for making a framework for ethical adoption of AI models in this sector. The committee, which is chaired by IIT Bombay's professor Pushpak Bhattacharyya, consists of seven other members including IT ministers, professors and businessmen. It has been instructed to submit a report after six months of its first meeting. The initiative was announced earlier this month, along with the Monetary Policy Statement, which was released on December 6.
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RBI Unveils Committee to Shape Responsible AI Guidelines
The Reserve Bank of India (RBI) has announced the composition of the committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector, on December 26. The nation's central bank had announced the committee on December 6 as part of its Statement on Developmental and Regulatory Policies. While the bank noted that Artificial Intelligence (AI) had the potential to automate complex processes and improve efficiency, it came with risks like algorithmic bias and data privacy. "To harness the benefits, it is critical to address the attendant risks early in the adoption cycle," said the RBI. Accordingly, the committee was set up to "recommend a robust, comprehensive, and adaptable AI framework for the financial sector." This development comes as the government is moving to regulate AI with greater scrutiny, especially in the financial sector. The Securities and Exchange Board of India (SEBI) recently informed Regulated Entities (RE) that they would be fully responsible for any AI programs the develop or deploy, including data privacy, compliance with existing laws and even the output of such models. The agency had previously asked Investment Advisers and Research Analysts who used AI tools to reveal the extent of the usage to clients. The Ministry of Electronics and Information Technology (MeitY) has also opened a second round of bids for projects under the "Safe & Trusted AI" pillar of the government's IndiaAI mission. This is after it selected eight proposals during the first round.
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The Reserve Bank of India has established an eight-member panel to create guidelines for the ethical use of AI in finance, addressing both opportunities and potential risks.
RBI Establishes FREE-AI Committee for Ethical AI in Finance
The Reserve Bank of India (RBI) has taken a significant step towards regulating artificial intelligence in the financial sector by forming an eight-member committee called FREE-AI (Framework for Responsible and Ethical Enablement of Artificial Intelligence) 12. This initiative, announced alongside the December Monetary Policy Statement, underscores the central bank's commitment to balancing technological innovation with ethical governance in the rapidly evolving landscape of AI adoption in finance 3.
Committee Composition and Leadership
The FREE-AI committee is chaired by Pushpak Bhattacharyya, a professor from the Department of Computer Science and Engineering at IIT Bombay 12. The panel comprises a diverse group of experts from academia, government, and industry, including:
- Suvendu Pati, CGM, RBI
- Abhishek Singh, Additional Secretary, Ministry of Electronics and Information Technology
- Debjani Ghosh, independent director for Reserve Bank Innovation Hub
- Dr. Balaraman Ravindran of IIT Madras
- Rahul Matthan, Partner, Trilegal
- Anjani Rathor, Chief Digital Officer, HDFC Bank 14
This multidisciplinary team brings together varied perspectives to address the complex challenges of AI in finance.
Objectives and Scope
The committee's mandate is comprehensive, focusing on several key areas:
- Studying the current level of AI adoption in financial services
- Reviewing global regulatory and supervisory approaches to AI in the financial sector
- Recommending a framework for responsible and ethical adoption of AI models
- Identifying potential risks associated with AI
- Proposing evaluation, mitigation, and monitoring frameworks for regulated entities 23
The scope of the committee's work extends to banks, non-banking financial companies (NBFCs), payment system operators (PSOs), and fintech entities 3.
Timeline and Support
The FREE-AI committee is expected to submit its report within six months from the date of its first meeting 12. The RBI's FinTech Department will provide secretarial support to facilitate the committee's work 3.
Significance and Context
This initiative comes at a crucial time when AI's role in finance is expanding rapidly. The RBI recognizes both the potential benefits of AI, such as process automation and improved efficiency, and the associated risks, including algorithmic bias and data privacy concerns 5.
The formation of the FREE-AI committee aligns with broader governmental efforts to regulate AI. For instance, the Securities and Exchange Board of India (SEBI) has recently mandated that Regulated Entities (REs) take full responsibility for AI programs they develop or deploy 5.
Expected Outcomes
The committee's recommendations are anticipated to set benchmarks for the ethical and sustainable use of AI in India's financial sector. By addressing both opportunities and challenges, the FREE-AI initiative aims to create a robust framework that will guide the responsible integration of AI models into the country's financial infrastructure, particularly catering to the growing fintech ecosystem 34.
As AI continues to transform the financial landscape, the RBI's proactive approach through the FREE-AI committee demonstrates a commitment to fostering innovation while safeguarding ethical standards and mitigating potential risks in this critical sector.
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