Reserve Bank of India unveils AI model risk guidance as firms seek AI governance standards

The Reserve Bank of India (RBI) has released draft Guidance on Regulatory Principles for Model Risk Management, applying to banks, NBFCs, asset reconstruction firms and credit information companies. The framework mandates board‑approved model risk management policies, independent validation, tiered risk controls and specific safeguards for AI and machine‑learning models, including explainability, bias testing and cybersecurity. Stakeholders can submit comments until 24 July 2026.

Separately, corporate governance experts warn that boards must define what information should never be fed to generative‑AI tools. They advise excluding material non‑public data, merger‑and‑acquisition details, litigation‑related communications and executive‑compensation plans, citing legal and market‑impact risks. The guidance aims to make AI risk‑classification and documentation frameworks enforceable across companies.