Banking could change completely in the coming years. Moreover, that shift may directly affect accounts, loans, and everyday transactions. Artificial intelligence has already moved beyond being just another technology term. Instead, AI could soon influence important financial decisions.
Against this backdrop, RBI Governor Sanjay Malhotra delivered a clear message to banks nationwide. He urged institutions to guide this technology rather than simply follow its direction. Otherwise, Malhotra warned, AI could start shaping banking according to its own momentum.
Speaking at the recent FIBAC 2026 conference, Malhotra raised a fundamental question. He asked whether banks would shape AI’s journey or quietly follow its instructions. Financial institutions increasingly use artificial intelligence for customer service, risk assessment, and internal operations. Therefore, his warning carries growing significance.
Malhotra also cautioned banks against treating AI as another digital tool. Instead, he described it as a major transformation requiring fresh thinking across banking operations.
India’s Digital Infrastructure Could Become AI’s Launchpad
India’s strong digital infrastructure could determine how successfully banks adopt AI. Government-backed systems such as UPI, Aadhaar, DigiLocker, and ONDC have already created a new digital identity.
Additionally, Unified Lending Interface and Account Aggregator systems have entered the financial ecosystem. Malhotra believes this infrastructure can support future AI applications from banks and private companies.
Earlier technologies mainly increased human working speed. However, AI can perform tasks involving reasoning and understanding. Software coding offers one visible example, since artificial intelligence has already simplified that process.
Similarly, Malhotra believes AI could transform financial decision-making. He compared that potential with UPI’s impact on digital payments.
Basel III and Automated Approvals Also Feature in RBI’s Reform Push
The conference also covered banking reforms and fresh policy measures. RBI continues focusing on financial stability alongside smoother customer experiences.
Basel III rules will take effect from the beginning of the next financial year. According to the reference, banks remain fully prepared for implementation.
Meanwhile, RBI has finalised new rules covering loan risk, project finance, and dividends. The central bank has also automated more than 203 types of approvals.
Consequently, 99.9% of services now reach users within their prescribed timelines.
