AI Safety Must Keep Pace With Adoption in Financial Sector, Says CEA Anantha Nageswaran

New Delhi: Chief Economic Adviser (CEA) V. Anantha Nageswaran has said that artificial intelligence (AI) safety must keep pace with its growing adoption in the financial sector, emphasising the need for robust safeguards as financial institutions increasingly deploy AI-driven technologies.

Speaking at an industry event, Nageswaran highlighted the transformative role of AI in banking, insurance, capital markets and financial services. He noted that AI has the potential to improve efficiency, strengthen risk management, enhance customer experience and expand access to financial products.

However, he cautioned that rapid technological adoption should be accompanied by appropriate safety frameworks and regulatory oversight. According to the Chief Economic Adviser, maintaining public trust in AI-powered financial systems is essential for ensuring long-term stability and sustainable growth.

Nageswaran said policymakers, regulators and industry stakeholders must work together to address challenges related to data privacy, algorithmic bias, cybersecurity and the ethical use of artificial intelligence. He added that responsible AI governance will be crucial as the technology becomes more deeply integrated into financial services.

The CEA also underlined the importance of balancing innovation with consumer protection. While AI can drive productivity and support economic growth, he said financial institutions must ensure that automated decision-making remains transparent, accountable and fair.

India has witnessed rapid adoption of AI across sectors, with banks, fintech companies and insurance providers increasingly using machine learning and data analytics for fraud detection, credit assessment, customer service and operational efficiency.

Industry experts believe that as AI applications continue to expand, regulatory frameworks will need to evolve to manage emerging risks while encouraging innovation. The Reserve Bank of India and other financial regulators have also been examining the implications of AI on financial stability and consumer protection.

Nageswaran's remarks underscore the growing consensus that the future of AI in finance will depend not only on technological advancement but also on the development of strong governance mechanisms that inspire confidence among businesses and consumers alike.