RBI Governor Sanjay Malhotra highlights banking resilience and AI's role in fraud prevention

Reserve Bank of India (RBI) Governor Sanjay Malhotra stated that the Indian economy and banking sector are well-positioned to withstand global risks, including the West Asia crisis, shifting trade policies, and cyber threats. He noted that Indian banks maintain strong fundamentals, with a capital to risk-weighted assets ratio (CRAR) of approximately 17–18 per cent and gross non-performing assets (GNPAs) below 2 per cent.

Addressing technological shifts, Malhotra emphasized that artificial intelligence (AI) will be central to combating AI-driven fraud, noting that “it is AI and AI alone that can help limit AI frauds.” He argued that traditional rules-based systems cannot keep pace with fraudsters who adapt at the speed of an API call, whereas machine-learning models can identify anomalies in real time.

While encouraging banks to increase investment in AI, technology, and employee training, the Governor cautioned against excessive dependence on specific AI models or external technology providers. He advised banks to adopt AI “smarter, not faster,” stressing the importance of understanding how the technology works to maintain accountability and mitigate risks related to data security and cyber attacks.