Sanjay Malhotra emphasises the need for careful and ambitious use of AI to enhance credit access, cut costs, and strengthen security within India’s banking sector, while warning against potential risks of misuse.
Reserve Bank of India Governor Sanjay Malhotra has said artificial intelligence should be treated as a tool to be used carefully and ambitiously, not merely as a threat to be controlled. Speaking at the FICCI-IBA Annual Banking Summit, Malhotra argued that Indian lenders cannot afford to stand aside as AI reshapes credit assessment, customer service and back-office operations. He said the technology could help banks cut costs, improve efficiency and reach more customers, provided it is deployed with clear accountability and strong governance.
Malhotra said conventional lending still relies heavily on formal financial history, which leaves out many first-time borrowers, gig workers and small businesses without standard books of account. According to his remarks, AI models that draw on alternative information such as cash flows, GST filings, utility payments and digital behaviour can widen access to credit at lower marginal cost. Business Standard earlier reported that he has also pressed banks to use AI to reduce expenses, strengthen internal controls and improve customer experience, while keeping cybersecurity front and centre.
He also linked AI to India’s wider digital payments and public infrastructure, saying it could do for financial decision-making what the Unified Payments Interface did for transactions: make it faster, more precise and more widely available. The Economic Times reported that Malhotra has already pointed to the potential of a Unified Lending Interface and standards for digital customer onboarding, both aimed at using data and technology to expand lending. In his latest comments, he said voice tools in Indian languages could remove language barriers and make banking more inclusive, while predictive models could flag borrowers at risk of default early enough for counselling rather than simple recovery action.
At the same time, Malhotra warned that the same technology can deepen exclusion and instability if it is used carelessly. He said fraud now moves quickly enough that machine-learning systems must stay ahead of adaptive criminals, rather than relying on rule-based engines that are always behind. Reuters has not independently verified the full text of his speech, but related reports said the governor also urged banks to invest in technology, skills, partnerships and governance structures, with AI used to automate tasks such as document processing, reconciliation, audit sampling and regulatory reporting.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
