Sanjay Malhotra, Governor of the Reserve Bank of India, calls on banks to spearhead the use of AI in finance, leveraging India’s digital infrastructure amidst a global push for modernisation and stability.
Reserve Bank of India Governor Sanjay Malhotra has told banks they must take the lead in shaping how artificial intelligence is used across lending, customer service and back-office work, rather than waiting for the technology to dictate the terms of change. Speaking at the FIBAC 2026 conference, Malhotra said lenders face a clear choice: design the future of AI in banking themselves or end up following it.
The warning reflects a broader shift in Indian finance, where banks and other institutions are racing to use AI to cut costs, improve efficiency and sharpen customer service. According to Business Standard, Malhotra also stressed the need for strong cybersecurity and tighter internal controls to guard against fraud and misuse of data. Central Banking reported that he has also framed AI as a mixed force for global financial stability, offering resilience while creating fresh risks as technology shocks and geopolitical tensions reshape the system.
Malhotra pointed to India’s digital public infrastructure as the foundation for the next phase of innovation. Systems such as UPI, Aadhaar, DigiLocker and ONDC, along with newer frameworks like the Unified Lending Interface and account aggregators, give banks and private firms a base on which to build AI applications. In his view, this is more than a faster version of old technology: AI can carry out tasks that once required human judgement, from coding to financial decision-making.
The RBI governor’s remarks also came against a wider push to modernise banking rules while keeping the system stable. The central bank has said Basel III norms will take effect from the start of the next financial year, and it has already finalised new rules on loan risk, project finance and dividends. It has also automated more than 203 types of approvals, with 99.9% of services now being delivered within the set time, underscoring the regulator’s effort to reduce friction even as it pushes banks towards a more AI-driven future.
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