These principles emphasize trust, a people-first approach, innovation over restraint, fairness, accountability, understandability by design, and safety.

Among the key suggestions are integrating AI with existing digital platforms like the UPI payment system and designing audit frameworks to oversee AI applications effectively.

A Reserve Bank of India (RBI) committee has proposed a comprehensive framework to develop and regulate artificial intelligence (AI) in India's financial sector, aiming to foster innovation while managing risks.

The framework includes 26 recommendations across six categories: infrastructure, capacity, policy, governance, protection, and assurance, along with seven core principles or 'sutras' to guide AI adoption.

The report highlights that AI adoption in India’s financial sector is accelerating, with institutions increasingly leveraging automation for tasks such as risk assessment and fraud detection.

This initiative signals India’s strategic move to use AI to enhance financial inclusion, efficiency, and security, while proactively addressing potential risks.

The committee stresses that fostering innovation and managing risks should be pursued simultaneously, rather than separately.

Additional recommendations include requiring regulated entities to develop AI policies, expanding product approval and consumer protection processes, and strengthening cybersecurity practices.

The report also advocates for creating robust governance frameworks for the entire AI lifecycle to ensure responsible deployment and risk mitigation.