India must shape its AI journey rather than be shaped by default: RBI Governor

way2barak, Aug 12: The biggest risk of deploying Artificial Intelligence (AI) in banks is the erosion of human judgment and accountability, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Tuesday.

“No matter how sophisticated the [AI] model, the responsibility for a bank’s decisions rests with the bank, not with its algorithm. “The model decided” can never be an acceptable answer to a customer, an auditor, or the Reserve Bank,” he cautioned.

“Meaningful human oversight – the ability to explain, to intervene, and, where necessary, to override – must remain a design principle, not an afterthought,” Mr. Malhotra said while delivering the inaugural address at the FIBAC 2026 Conference, Mumbai on the theme “Winning in the AI Era: The New Playbook for Indian Banks”.