ARTICLE · 01 SEPTEMBER 2025

RBI's Move Toward Ethical And Responsible AI In Financial Sector

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On 13 August 2025, the Reserve Bank of India (RBI) released its report on the much-anticipated Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) for the financial sector.

IndiaFinance and Banking

Nishtha Chakrabarti

Amiya Mukherjee

On 13 August 2025, the Reserve Bank of India (RBI) released its report on the much-anticipated Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) for the financial sector. This comprehensive blueprint, developed by a high-level committee after months of consultation with banks, NBFCs, Fin-Tech businesses, and technology experts, marks a significant policy milestone in India's approach to balancing AI-driven innovation with robust risk management.

The rapid growth of Artificial Intelligence (AI) has led to gradual integration of AI into the business functions within the financial sector such as detection of fraud, customer service and risk management. While AI adoption in the financial sector has unlocked opportunities for improved customer engagement, enhanced credit assessment and precise risk monitoring and fraud detection, it also comes with its own set of challenges. These challenges include increased exposure to risks related

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