Ask an Expert
A committee formed by the Reserve Bank of India (RBI) has proposed a comprehensive framework to guide the adoption of artificial intelligence (AI) across the financial sector while managing its risks. The report, released in August 2025, offers 26 recommendations categorized under infrastructure, capacity, policy, governance, protection and assurance. It emphasizes building digital public infrastructure and supporting indigenous AI models tailored to the needs of Indian financial services.
The committee suggests establishing a multi-stakeholder standing committee to assess AI risks and opportunities and to integrate AI safely with key financial systems like UPI and audit frameworks. It also recommends setting up a fund to incentivize homegrown AI development, helping firms balance innovation with risk mitigation.
The initiative, known as the Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI), aligns with broader global efforts to ensure AI is deployed ethically and transparently. Key goals include fostering innovation, strengthening governance, enhancing consumer protection, and ensuring explainability and accountability in AI systems used by banks, fintechs and other regulated entities. The framework aims to position India as a leader in responsible AI use in finance.
