Encouraging AI Innovation with a Balanced Approach

An RBI panel has recommended a "tolerant supervisory stance" towards AI errors in the financial sector, aiming to balance innovation with consumer protection. This approach acknowledges the probabilistic nature of AI, suggesting that strict penalties could hinder technological advancement.

Framework for Responsible AI Use

The report outlines seven principles for AI use, including trust, human control, and transparency. It emphasizes the need for secure systems and accountability, proposing 26 recommendations to guide regulators and institutions.

Recommendations for a Safer AI Future

Key suggestions include improving data infrastructure, creating AI testing sandboxes, and developing local models to support smaller players. The panel also calls for flexible regulations and proportionate liability to ensure AI's benefits are realized without compromising safety.