RBI Governor Sanjay Malhotra on AI: India Must Guide Its AI Growth, Banking System Ready for Future Risks

Reserve Bank of India (RBI) Governor Sanjay Malhotra, speaking on artificial intelligence (AI) at an event in Mumbai, said that India needs to guide its progress in the field of AI. He spoke about global risks, stating that Indian banking systems are well placed to take up future challenges, as the sector is very strong in terms of capital, profitability, and asset quality. He said that while the increase in inter-connectedness between non-banking financial institutions (NBFCs) and the unregulated sector continues to be a global challenge, it is not a worry for India.

He said that tensions in West Asia are just one of the many challenges that confront us as a result of global geopolitical uncertainties; there are risks of tariffs and cyber fraud as well. However, despite all these risks, the Indian banking system and the financial stability are robust. He added that the Indian banking system is well placed to face challenges since the banking sector is robust in terms of having strong capital, profitability, and asset quality. He further added that every time global challenges have confronted us, we have come out much stronger, thanks to the diversification of our supply chains and the availability of other energy sources like ethanol and electric vehicles. The government has signed free trade agreements (FTA) with many nations.

Speaking on cross-border payments and local currencies with BRICS countries, the Governor said that a task force of central banks of BRICS countries has been formed, which is discussing topics such as public digital infrastructure, retail transactions, cross-border payments, remittances, and CBDCs. MoUs have been signed with the central bank regarding local currencies, but they are still in the initial stages.