RBI Governor urges banks to use AI for credit expansion

Reserve Bank of India Governor Sanjay Malhotra has urged banks to utilize artificial intelligence to expand access to formal credit. Speaking at the FIBAC 2026 conference in Mumbai, Malhotra noted that AI can evaluate borrowers who lack traditional credit histories by analyzing alternative data such as cash flows, utility payments, and GST filings.

While promoting AI as a tool to include more customers in the formal lending system, the Governor emphasized the necessity of human oversight and accountability. He warned against the use of opaque models, stating that banks must be able to provide clear reasons for credit denials to borrowers, auditors, and regulators.

Malhotra also highlighted risks including algorithmic bias, privacy concerns, and cybersecurity threats. He stressed that banks must maintain control over the technology to ensure that AI is used as a capability to be responsibly harnessed rather than just a risk to be contained.