Reserve Bank of India Governor Shaktikanta Das has cautioned that the growing use of AI and machine learning in financial services globally can lead to financial stability risks and warrants adequate risk mitigation practices by banks.
He noted that heavy reliance on AI can lead to concentration risks, especially when a small number of technology providers dominate the market. This could amplify systemic risks as failures or disruptions in these systems may cascade across the financial sector. Das emphasized the need for banks to implement robust risk mitigation practices to address these challenges.