Rbi Shirish Chandra Murmu Ai Banking Fraud Prevention Credit Access

Reserve Bank of India’s (RBI) Deputy Governor Shirish Chandra Murmu on Wednesday underlined the importance of artificial intelligence (AI) in the banking system but emphasised that human intervention remains necessary in implementing the technology and identifying the loopholes.

“Its purpose is not to pull governance into day-to-day execution. It is to see where institutional capability or risk appetite is falling behind changing needs, and where separate weaknesses, each individually manageable, might combine into something larger,” said Murmu, speaking at an event in Mumbai.

“A model that performs well overall can still fail a small but already vulnerable group. Intelligence, therefore, demands clarity — about what a technology delivers, what it leaves out, and whether its output fits the decision at hand,” Murmu said, adding that this is what makes human judgement indispensable.

He highlighted that intelligence should not just be limited to AI but also take into account multiple components — analytical intelligence, human intelligence, governance intelligence, and collective intelligence, which entails information being pooled across banks.

Murmu emphasised that banks should use AI and technology to reach and understand new borrowers. “Where a lender genuinely lacks reliable information about a borrower, the absence of information should not, by itself, be mistaken for adverse information,” said Murmu.

“Treating ‘we don’t know’ as though it meant ‘we know it’s bad’ leads to credit being denied where it need not be. This is precisely where banks must put their technological capabilities to work,” he added.

While uniform adaptation of technology and models increases efficiency across the banking system, this “undue concentration” also raises the risk of digital fraud, which can move through multiple accounts and institutions.

“When risk becomes collective, the intelligence marshalled against it must become collective too. MuleHunter.ai and the Digital Payments Intelligence Platform are the Reserve Bank’s answer to exactly this challenge — drawing together dispersed signals, with the help of AI, so that detection comes earlier and the response is better coordinated,” said the deputy governor.

Furthermore, AI’s pattern recognition abilities should be used in banking to identify and act on emerging weaknesses related to fraud, conduct, operations, and cyber risk before it becomes a disruption.

Murmu highlighted how AI-driven productivity should have a different barometer when it comes to the banking system. “Productivity in banking is not merely output per employee or the cost-to-income ratio; it is whether the same institution, with the same resources, reaches a borrower it could not reach before, resolves a grievance that would earlier have remained pending, prices risk more accurately,” according to Murmu.

“If AI compresses costs without widening reach or improving the customer’s experience, we shall have automated the existing system rather than improved it,” he added.