RBI introduces mule account detector, framework for responsible AI

During the Monetary Policy meeting today, the Reserve Bank of India (RBI) said that it will setting up a committee to recommend a Framework for Responsible and Ethical Enablement of AI (FREE-AI) in the finance sector. 

RBI Governor Shaktikanta Das said that while the sector is witnessing rapid transformation through technologies such as AI, tokenization, Cloud Computing, etc., there is a need to address the associated risks such as algorithmic bias, explainability, and data privacy. This framework will help address these challenges.

The committee will have experts from diverse fields, details of which will be notified separately. They will be recommending a robust, comprehensive, and adaptable AI framework. “While the benefits are many, the attendant risks like algorithmic bias, explainability of decisions, data privacy, etc., are also high. To harness the benefits, it is critical to address the attendant risks early in the adoption cycle. As a step in this direction, it is proposed to constitute a committee to develop a Framework for Responsible and Ethical Enablement of AI (FREE-AI) in the Financial Sector,” RBI said.

Additionally, RBI also introduced an AI-machine learning model called MuleHunter.AI. It is developed by Reserve Bank Innovation Hub (RBIH) in Bengaluru. It will help banks in dealing with the issue of bank accounts and reduce digital fraud. Advanced ML algorithms can analyze transaction and account detail-related datasets to predict mule accounts with higher accuracy and greater speed than typical rule-based systems. This machine learning-based approach has enabled the detection of mule accounts within two banks’ systems, RBIH’s portal said in a blog.

"Banks are encouraged to collaborate with RBIH to further develop the MuleHunter.AITM initiative to deal with the issue of mule bank accounts being used for committing financial frauds," RBI’s statement said.