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RBI unveils FREE-AI framework to drive ethical AI adoption in finance
New guidelines introduce ‘7 Sutras’ and 26 recommendations to balance innovation with fairness, transparency, and risk management in the financial sector.
The findings by RBI underline that, with proper use, generative AI can make India’s banking system more inclusive, customer-friendly, and growth-focused.
The Reserve Bank of India (RBI) has released the report of its Committee on the Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector, laying the groundwork for AI-led innovation under robust governance measures.
RBI formed the committee on December 26, 2024, following an announcement in its Statement on Developmental and Regulatory Policies issued alongside the Monetary Policy Statement on December 6, 2024. After extensive consultations with stakeholders, the committee submitted its final recommendations, now available on the RBI website, as per a CNBCTV-18 report.
The report introduces seven guiding principles, known as the “7 Sutras”, which form the foundation for ethical AI adoption. It also outlines 26 actionable recommendations under six strategic pillars aimed at fostering innovation while addressing concerns around bias, opacity, and systemic risk.
According to the RBI, the FREE-AI framework envisions a financial ecosystem where innovation and risk management go hand in hand, ensuring AI adoption benefits consumers, institutions, and the economy at large.
The central bank has also noted that GenAI could play a transformative role in Indian banking by delivering sharper customer insights, bolstering risk management, and optimising cost control. The bank reportedly said the technology can enable financial institutions to improve efficiency and deliver more personalised services at scale.
The RBI noted that AI adoption in financial services is accelerating due to the need to improve customer experience, increase revenue, reduce operational costs, ensure regulatory compliance, and support innovation. Generative AI allows banks to process vast amounts of data, identify behavioural trends, and tailor services to customer needs.
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