RBI's FREE-AI Framework: Pioneering Ethical AI in Indian Finance

The Reserve Bank of India (RBI) is spearheading the democratization of Artificial Intelligence (AI) in the financial sector, unveiling a new framework named FREE-AI. This initiative is designed to reduce the costs and risks associated with AI experimentation by introducing AI sandboxes, sectoral datasets, and indigenous models, according to senior executives in the financial services industry.

Released on August 13, the Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) represents a significant milestone. It seeks to balance innovation with risk management through guiding principles and strategic recommendations. The framework includes seven foundational principles structured under six pillars: Governance, Data, Fairness, Transparency, Accountability, and Risk Management.

Industry leaders, such as Dewang Neralla, CEO of HiWiPay, expressed optimism about the potential for smaller players to innovate. Shikhar Aggarwal of BLS E-Services Ltd highlighted AI's ability to enhance customer engagement across India's linguistic diversity. Despite implementation challenges, the framework is seen as pivotal in transforming the financial landscape by promoting responsible AI use.

(With inputs from agencies.)