The finance ministry has initiated a comprehensive assessment of artificial intelligence adoption in the banking sector, particularly focusing on AI-driven loan collection tools. According to reports from The Economic Times, the ministry is seeking feedback from banks to evaluate the extent of AI implementation across the banking sector and assess customer protection practices. A bank executive noted that these discussions are part of the broader agenda on AI implementation in banks, covering both AI adoption and customer protection aspects.
Most banks are currently using AI tools for borrower engagement and repayment facilitation, as reported by The Economic Times. However, the adoption varies significantly across different AI applications. An industry executive explained that while most banks are using AI tools for borrower engagement and repayment, only a few lenders have implemented conversational AI-based loan collection solutions. The government is particularly interested in understanding the implementation stages across the banking sector and the current extent of AI adoption.
Under the Enhanced Access and Service Excellence (EASE) 9.0 reforms agenda, public sector banks are required to assess and define a bank-specific approach for establishing a tech stack and infrastructure for GenAI implementation. As reported by The Economic Times, this framework aims to drive awareness, adoption and impact assessment to yield gains across productivity, revenue and customer experience. The reforms span not only collection and credit monitoring, but also fraud management, credit assessment and processing. A bank executive confirmed that agentic AI has been included in the latest reforms agenda, spanning multiple operational areas.
Reserve Bank of India governor Sanjay Malhotra emphasized that effective AI adoption can significantly improve the productivity of Indian banks across operations, sales and customer service, and credit and collection. According to The Economic Times, he urged banks to establish board-approved AI governance policies with clear accountability for outcomes, not merely technology procurement. The governor also stressed building capacity to explain AI-driven decisions that materially affect customers, particularly regarding lending and fraud. Most banks are currently in different stages of evaluation and implementation for conversational AI solutions.
Earlier this year, finance minister Nirmala Sitharaman chaired a meeting with electronics and information technology minister Ashwini Vaishnaw to assess potential impact of emerging threats linked to AI models. As reported by The Economic Times, the government later decided to establish a robust mechanism for real-time threat intelligence sharing among banks, the Indian Computer Emergency Response Team and other relevant agencies. This initiative aims to identify emerging threats and disseminate them without delay across the banking ecosystem, addressing concerns about potential misuse of AI technologies for weaponizing software vulnerabilities.
