RBI Governor Sanjay Malhotra Advocates AI Deployment in Banking to Combat Real-Time Digital Frauds
Reserve Bank of India Governor Sanjay Malhotra on Tuesday called for increased use of artificial intelligence (AI) in the banking system to stay ahead of fraudsters . “It is AI and AI alone that can help limit AI frauds,” Malhotra said at the FIBAC 2026 conference in Mumbai.
“Fraud today moves at a speed of an (application programming interface) API call. Rules-based fraud engines, however well-designed, are perpetually one step behind the fraudsters, who adapt more frequently. It is only AI and machine learning models, which continuously learn from these transaction patterns, that can identify anomalies in real time, rather than after the loss has occurred.”
According to the governor, not just fraud detection but if used intelligently, AI will save costs for the banking system, democratise credit, give access formal credit to all sections of the society at reasonable rates.
“We, in India, stand at a vantage point to leverage AI. We have the most advanced public digital infrastructure, whether it is Aadhaar, UPI, DigiLocker — we are trying to build an improved, unified lending system aggregator,” he said.
The RBI has set up a committee on the responsible use of AI, which submitted its report last year, proposing a framework for the responsible and ethical use of AI, Malhotra said.
“We have still a large, unsolved MSME credit market estimated in tens of lakhs of crores of rupees, a retail credit culture that is only now maturing, customer service that can be vastly improved, intermediation costs that can be further decreased, and digital frauds that need to be prevented and avoided,” he added.
On the adoption of AI by the banking system, he stressed on the need of a good understanding of what is being employed and the accountability for the outcomes.
“The banks that will win in the AI era will not necessarily be the ones that adopt AI faster or the most. They will be the ones who adopt a good understanding of what they are employing, the clearest accountability for its outcomes,” Malhotra said.
This article was first uploaded on August eleven, twenty twenty-six, at thirteen minutes past eleven in the night.
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