Mumbai, Apr 13 (BNP): Reserve Bank of India Deputy Governor Swaminathan J has cautioned that adopting artificial intelligence without proper safeguards could amplify existing vulnerabilities and introduce new risks in the financial sector.

Speaking at a memorial lecture at SASTRA University in Thanjavur, he noted that AI is rapidly transforming how financial institutions operate—from customer service to document processing and decision-making. However, he stressed that this growing reliance on technology must be accompanied by strong regulatory oversight and risk management frameworks.

He highlighted that while AI can improve efficiency and innovation, unchecked use may lead to issues such as bias in decision-making, operational risks, and reduced transparency.

The remarks underline the need for a balanced approach, where financial institutions leverage AI’s benefits while ensuring safeguards are in place to protect stability and trust in the system.