RBI sets up committee to develop ethical AI framework for financial sector

The Reserve Bank of India (RBI) announced the formation of an eight-member committee for developing an ethical AI framework for the finance sector. Called the Framework for Responsible and Ethical Enablement of AI (FREE-AI), formation of such a committee was first announced earlier this month.

The newly constituted team has members from top private and public institutions including the Indian Institute of Technology (IIT), Reserve Bank Innovation Hub, Ministry of Electronics and Information Technology (MeitY), HDFC Bank, and Microsoft India, among others. The Committee may also invite domain experts, industry representatives, RBI departments, and other stakeholders, as required for consultations.

The duties of the committee would be to assess the current level of adoption of AI in financial services and to review regulatory approaches. The team will also identify potential risks associated with AI and recommend an evaluation and monitoring framework, and consequent compliance requirements for financial institutions. Lastly it will be recommending a framework for ethical AI adoption in the Indian financial sector. From the date of first meeting, the committee will be submitting its report in six months.

“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 on December 6 when the committee was first announced.