The Reserve Bank of India (RBI) has issued draft guidelines requiring banks and other regulated entities to strengthen governance and oversight of artificial intelligence (AI) and machine-learning models. The proposed framework mandates board-approved risk management policies covering all models, including AI applications, along with comprehensive model inventories, independent validation, and continuous risk assessment at both individual model and enterprise levels. The guidelines also require human oversight of AI-driven decision-making processes, enhanced cybersecurity controls for customer-facing generative AI applications, and timely corrective actions where risks are identified. The initiative reflects the RBI’s growing focus on ensuring that the adoption of AI in the financial sector is accompanied by robust governance, accountability, and risk management practices.

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