Banks Should Expand AI Use While Strengthening Cybersecurity And Fraud Controls: RBI

The Reserve Bank of India (RBI) has asked banks to make greater use of artificial intelligence (AI) to improve customer services and operational efficiency, while putting in place strong safeguards against cyber threats, fraud and misuse of data.

The discussions took place during the RBI's half-yearly meeting with the managing directors and chief executive officers of public sector banks and select private sector lenders. The meeting was chaired by RBI Governor Sanjay Malhotra and attended by Deputy Governors Swaminathan J, Poonam Gupta, S. C. Murmu and Rohit Jain, along with senior RBI officials overseeing supervision, regulation, enforcement, consumer protection and financial inclusion.

The meeting came a day after Finance Minister Nirmala Sitharaman held discussions with senior bankers in New Delhi on issues related to the banking sector.

Focus On AI And Cybersecurity

According to an official RBI press release, the Governor has asked banks to use advanced technologies, including AI, to expand their reach, improve operational efficiency, reduce costs and enhance customer experience.

At the same time, he stressed the need for robust cybersecurity, strong internal controls and measures to prevent fraud and data misuse as banks increase their use of digital technologies.

The focus on AI and cybersecurity comes at a time when financial institutions globally are paying closer attention to technology-related risks, particularly subjects closely linked to cyber attacks and software vulnerabilities.

Fraud Detection And Digital Initiatives

The RBI and bank executives have also reviewed progress on several technology-driven initiatives aimed at strengthening the financial system.

These included the adoption of the RBI's AI-powered MuleHunter platform for detecting mule accounts used in financial frauds, the Unified Lending Interface, the Central Know Your Customer Records Registry (CKYCR), early detection of fake Indian currency notes (FICN), the retail central bank digital currency (CBDC), the Retail Direct platform for government bond investments and FX Retail, the electronic foreign exchange trading platform for retail users.

The Governor has also noted that the banking sector has recorded broad-based growth and asked banks to continue meeting the credit and banking needs of different sections of the economy with prudence.

FCNR Deposits Also Discussed

The mobilisation of Foreign Currency Non-Resident (Bank), or FCNR(B), deposits also figured in the discussions.

The issue was taken up a day earlier during the Finance Minister's meeting with bankers, along with external commercial borrowings and overseas foreign currency borrowings.

Earlier this year, the RBI opened a special window for banks to raise FCNR(B) deposits to support foreign exchange reserves and help manage pressure on the rupee against the US dollar.

According to the bankers' statement given to PTI on the day before, the initiative has received interest from non-resident Indians in Singapore, Hong Kong, West Asia, the UK and the US. The Finance Minister has asked banks to expand their outreach to the NRI community and maintain the momentum in deposit mobilisation.