News: The Reserve Bank of India has set up a committee to develop a Framework for Responsible and Ethical enactment of Artificial Intelligence (FREE-AI) in the financial sector.
About the Committee
- Members: The committee comprises of 8 members and is headed by Dr Pushpak Bhattacharyya.
- Objectives:
- To assess the current level of adoption of AI in financial services, both globally as well as in India.
- To review regulatory and supervisory approaches on AI, keeping in mind the financial sector globally.
- To identify potential risks associated with AI
- To recommend an evaluation, mitigation, monitoring framework and compliance requirements for financial institutions.
- To recommend a framework for responsible and ethical adoption of AI models in the Indian financial sector.
- Timeline: The committee has to submit its report within 6 months from the date of its first meeting.
Benefits of AI in financial sector
- Improved Operational Efficiency: AI has potential to boost productivity by automating many tasks like loan processing, fraud detection, document processing, customer interactions.
- Cost Savings: AI can enable financial institutions to increase their profit margins by carrying out data driven creditworthiness assessments.
- Greater Customer Satisfaction: AI tools can be used to enhance customer support, leading to increased customer loyalty. Eg: use of AI powered chatbot.
