RBI Deputy Governor Shirish Chandra Murmu has urged Indian banks to adopt artificial intelligence and other technologies to improve credit access, reach new borrowers and strengthen financial inclusion. However, he said technology must not replace human judgement in important banking decisions.
Speaking at a banking industry event, Murmu said banks are generally better at using technology to serve existing customers than at identifying and understanding people who have never accessed formal credit. Artificial intelligence, he said, can help lenders analyse new forms of data and assess borrowers who do not have a conventional credit history.
AI can help reach new borrowers
Many individuals and small businesses remain outside the formal credit system because they lack a detailed borrowing record. AI systems can help banks study indicators such as business cash flows, tax records, utility payments and other verified financial information.
This could make it easier for lenders to identify genuine borrowers who may otherwise be rejected by traditional systems. At the same time, Murmu cautioned that a lack of information should not automatically be treated as evidence that a borrower is risky.
The need for better credit assessment is significant. The share of new businesses entering the formal credit system reportedly declined from 52% in 2022–23 to 42% in 2025–26, even though outstanding commercial credit increased by 14%. This shows that growth in overall lending does not necessarily mean that first-time borrowers are receiving better access to finance.
Human oversight remains important
Murmu made it clear that AI should support banking professionals, not replace them completely. Algorithms can process large volumes of information and identify patterns quickly, but they may also produce inaccurate, biased or unexplained results.
For this reason, banks must ensure that people remain responsible for decisions involving customers. Loan rejections, changes in credit limits and other major decisions should be subject to review by an authorised human official.
Banks must also ensure that customers know when they are interacting with an automated system. Clear explanations can help consumers understand how decisions are made and where they can seek assistance or appeal an outcome.
Banks told to test AI systems
The RBI Deputy Governor also called for stronger safeguards before AI tools are introduced into banking operations. Financial institutions should maintain a record of the AI systems they use, including technology supplied by outside vendors.
These systems should be tested for accuracy, bias, security and unexpected failures before deployment. Regular monitoring is also necessary because an AI model that performs well initially may become less reliable when market conditions or customer behaviour change.
Boards and senior management should remain accountable for the way AI is used. Banks must also be prepared to intervene when an automated decision appears unfair or could cause serious harm to a customer.
Financial inclusion is more than opening accounts
Murmu said banks should measure financial inclusion by looking beyond the number of accounts opened. It is equally important to know whether customers are actively using banking services and whether they have sufficient knowledge to make informed financial decisions.
The RBI’s message is clear: AI adoption in banking should focus not only on efficiency and cost reduction but also on inclusion, fairness and customer protection.
Artificial intelligence can help banks serve more people, detect fraud and improve decision-making. Yet human judgement, transparency and accountability must remain at the centre of the financial system. The future of banking, therefore, is likely to be shaped by cooperation between advanced technology and responsible human supervision.
