AI can become a hindrance in financial stability, statement of RBI Governor Shaktikanta Das

New Delhi : In a conference organized by RBI, RBI Governor Shaktikanta Das has given a big statement regarding AI. He has expressed concern about the increasing dependence on Artificial Intelligence and Machine Learning in the banking sector. In this program on Monday, he said that he has also asked the lenders to take advantage of the strengths of big technology companies.

He said that the latest technology advancements like AI and ML have opened new avenues of business and profit expansion for financial institutions. However, he also said that these technologies also pose risks to financial stability.

There may be concentration risk

Addressing a conference organized by central bank RBI here, he said, “Heavy reliance on AI could lead to concentration risk, especially when the market is dominated by a small number of technology providers. “This could increase systemic risk, as a failure or disruption in these systems could spread throughout the financial sector.”

unforeseen consequences

He said that the increasing use of AI brings new vulnerabilities to the fore. This increases the risk of cyber attacks and data breaches. Furthermore, the ambiguity of AI makes it difficult to audit or explain the decision-making algorithms. This may lead to unexpected results.

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Adequate risk protection measures

“Banks and other financial institutions should take adequate risk protection measures against all these risks,” he said. “In the final analysis, banks should take advantage of AI and BigTech and not let BigTech take advantage of them.”

Misinformation spreads rapidly

The increasing digitalization of financial services has increased the efficiency of the financial sector around the world, but it has also revealed many challenges that central banks must deal with. Talking about the risks of digitalisation, the RBI Governor said that in the modern world with deep presence of social media and widespread access to online banking with money transfers in seconds, rumors and misinformation can spread very fast and lead to cash crunch. may be born.

(with agency input)