RBI Is Planning To Extensively Use AI To Improve Regulatory Supervision

In order to evaluate its enormous database and enhance regulatory supervision of banks and NBFCs, the Reserve Bank plans to extensively utilise advanced analytics, AI, and ML for providing supervisory inputs. The RBI's central bank is also thinking about hiring external experts. AI and ML are frequently used for data analytics and data collection. While the RBI already employs AI and ML in supervisory procedures, it now plans to build it up so that the Department of Supervision at the central bank may gain from advanced analytics. 

In order to expand the analysis of a substantial data repository with RBI and externally, through the hiring of external experts, this project was designed to make use of advanced analytics and artificial intelligence/machine learning. This is expected to significantly improve the effectiveness and sharpness of supervision. The department uses linear and a few ML models for supervisory examinations, and the RBI has supervisory authority over, among other things, banks, urban cooperative banks (UCB), local area banks, small finance banks, payment banks, non-bank financial companies (NBFCs), credit information companies, and all India financial institutions.

With the use of on-site inspections and remote monitoring, it carries out ongoing supervision of such entities. The chosen consultant will be expected to investigate and profile data with a supervisory focus, among other things. According to the announcement, the chosen consultant will be expected to profile and investigate data with a supervisory focus with the "goal to improve the Reserve Bank's data-driven surveillance capabilities." Globally, regulatory and supervisory agencies use so-called "Supertech" and "Regtech" machine learning techniques to support their oversight functions. While still in its exploratory stages, the majority of these strategies are growing in scope and popularity. The goal is to improve the Reserve Bank's data-driven surveillance capabilities.