India’s Reserve Bank urges lenders to view artificial intelligence as a tool for growth and innovation, leveraging digital infrastructure to reshape lending and operations amid accelerating adoption.
India’s central bank is urging lenders to treat artificial intelligence as a tool for expansion, not simply a risk to manage, as the country’s banking sector accelerates its use of automation in credit and operations. Speaking at the FIBAC 2026 conference in Mumbai, Reserve Bank of India governor Sanjay Malhotra said banks should develop their own AI strategies and use the technology with human judgement still in place.
Malhotra argued that AI could help lenders go beyond traditional underwriting, which often leans on credit scores, repayment records, income statements and formal business accounts. He said models can analyse alternative signals such as cash flows, GST filings, utility bills and digital platform data, helping banks evaluate borrowers who may have steady earnings but limited paperwork.
The RBI chief also pointed to India’s digital infrastructure as a major enabler. Aadhaar, UPI, DigiLocker, the Account Aggregator system, ONDC and the Unified Lending Interface give banks more ways to connect payments, identity and data flows. Malhotra said AI could reshape financial decision-making in the same way UPI changed digital payments.
The comments come as the sector moves from experimentation towards wider deployment. The Economic Times reported that seven public sector banks have rolled out 32 generative AI use cases under the EASE 8.0 programme, aimed at improving efficiency and credit assessment. Separately, the Economic Survey 2025-26 found that only 21% of Indian banks and financial institutions are implementing or developing AI solutions for core operations, with adoption concentrated among larger lenders.
That gap suggests the next phase will be uneven. Smaller urban co-operative banks and non-banking finance companies still face constraints in data systems and skilled staff, according to the survey and Business Standard. But industry observers quoted by LiveMint and Economic Times say the direction is clear: AI is moving from pilot projects into everyday banking, with lending, compliance, fraud checks and customer service likely to be the biggest beneficiaries.
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