RBI rolls out measures to check digital frauds, drive ethical AI adoption

RBI Governor Shaktikanta Das has announced the formation of a committee to develop a framework for responsible and ethical use of artificial intelligence (AI) in the financial sector.

"In order to harness the benefits of these technologies while addressing the associated risks, such as algorithmic bias, explainability, and data privacy, a committee comprising experts from diverse fields will be set up to recommend a framework for responsible and ethical enablement of AI," said Das during the Monetary Policy Committee (MPC) meeting on Friday.

The committee, named FREE AI, will address critical challenges such as algorithmic bias, transparency, and data privacy, and create a roadmap for sustainable AI integration in the financial sector.

Additionally, the RBI is intensifying its efforts against digital financial fraud with the development of MuleHunter.AI, an AI and machine learning (ML)-powered tool designed to detect and mitigate the use of mule accounts. It is currently being piloted by Reserve Bank Innovation Hub (RBIH), a subsidiary of RBI.

"This will help banks deal with the issue of mule accounts expeditiously and reduce digital frauds," Das said.

Das also highlighted ongoing measures, including the rollout of cybersecurity frameworks, fraud prevention mechanisms, and advanced transaction monitoring systems, as well as a hackathon called Zero Financial Frauds, which is aimed at developing innovative solutions to combat fraud.

"We encourage banks to collaborate with RBIH to refine and adopt the MuleHunter.AI model," Das stated.

Use of money mule accounts is a common method adopted by fraudsters to channel proceeds of frauds, RBI said.

(The story has been updated with additional information)