RBI is setting up a committee for the formulation of a Framework for Responsible and Ethical Enablement (FREE) of Artificial Intelligence (AI) in the financial sector, the apex bank announced in a press release on Thursday.

The central bank had revealed its plans to set up a FREE-AI committee as part of the Statement on Developmental and Regulatory Policies released along with the Monetary Policy Statement on December 06, 2024.

The committee will be chaired by Dr. Pushpak Bhattacharyya, who is an IIT-Bombay CSE professor. The committee includes 8 members namely Debjani Ghosh, a distinguished fellow at NITI Aayog and an independent director at Reserve Bank Innovation Hub, Dr. Balaraman Ravindran, IIT-M Wadhwani School of Data Science and AI head, Abhishek Singh, MEITy additional secretary, Rahul Matthan, partner at Trilegal, Anjani Rathor, group head and chief digital experience officer at HDFC Bank, Sree Hari Nagaralu, Microsoft India’s security AI research head, and Suvendu Pati, CGM of FinTech department at RBI who will serve as a member secretary of the committee.

RBI’s FinTech department will provide secretarial support to the committee. The committee may also invite domain experts, industry representatives, RBI departments, and other stakeholders for consultations or participation in its deliberations, as needed.

The committee has been tasked with the evaluation of the current adoption of AI in financial services globally and in India. FREE-AI will review regulatory and supervisory approaches to AI in the financial sector worldwide and identify any associated risks. Upon the assessment, the committee will have to recommend a framework for evaluating, mitigating, and monitoring these risks, along with compliance requirements for financial institutions, including banks, NBFCs, FinTechs, and PSOs. Additionally, it will propose a governance framework for the responsible and ethical adoption of AI models and applications in the Indian financial sector.

The committee's first meeting date is yet to be specified, but it will submit its report within six months of convening.