'Long-Term Implications Of AI Adoption On The Financial System Remain Uncertain'

Tue, 23 September 2025

11:30

Adoption of AI in the banking sector must be undertaken in a responsible and measured manner, says Reserve Bank of India Deputy Governor M Rajeshwar Rao, adding that the excitement around AI's benefits should not overshadow prudent risk management.

Speaking at a CNBC-TV18 event on September 16, Rao said, "As AI transforms financial services, it's clear this is a development that is not a mere upgrade but a major shift impacting products, processes, and operations.

''From the risk perspective, the long-term implications of AI adoption on the financial system remain uncertain but carry potentially far-reaching consequences," Rao said, adding that it is imperative for the financial sector to approach AI adoption with foresight -- investing not just in innovation but also in resilience by building strong governance structures, diversifying dependencies, continually assessing emerging risks, and ensuring their AI strategies align with the long-term safety and sustainability of the financial system.

Rao also highlighted that, to build a sustainable, AI-powered financial future, it is important to ensure that AI-driven decisions are ethical, unbiased, and transparent.

-- Subrata Panda, Business Standard

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