The Reserve Bank sees Artificial Intelligence (AI) as a capability to be responsibly harnessed and not merely as a risk to be contained, and Indian banks cannot afford to sit on the sidelines on this front, according to RBI Governor Sanjay Malhotra. By harnessing AI capability, the economics of credit delivery changes fundamentally, banks can serve customers better and enhance their operational efficiency, he said at the FICCI-IBA Annual Banking Summit. At the same time, AI-enhanced credit risk models, liquidity forecasting, and scenario analysis allow banks – and, indeed, RBI – to see emerging stress earlier than lagging financial statements permit. Malhotra observed that AI allows banks to serve customers better – provided it is used to augment rather than merely replace human judgment. Effective adoption of AI can significantly improve the productivity of Indian banks across operations, sales and customer service, and credit and collections, he added.