India Must Adopt Proactive Approach on AI Safety in Financial Sector, Says CEA Nageswaran
India must take a proactive stance regarding the safety and security dimensions of artificial intelligence, particularly within the financial sector, Chief Economic Adviser V. Anantha Nageswaran stated. Speaking during a fireside chat with Gautam Aggarwal, Division President for South Asia and Country Corporate Officer, India, Mastercard, at ASSOCHAM’s 3rd FinTech Festival in New Delhi, Nageswaran emphasised that technology adoption should not lead to exclusion and that human oversight must be preserved.
What Happened
During the event, Chief Economic Adviser V. Anantha Nageswaran addressed the opportunities and risks associated with emerging technologies in finance. He noted that while artificial intelligence can improve how financial institutions evaluate creditworthiness and detect early signs of financial stress or defaults, safeguards are necessary to ensure that algorithms do not act as barriers to access.
Nageswaran also offered a broader assessment of the macroeconomic landscape, observing that the coming two decades will present tougher structural challenges than the three decades following the 1991 economic reforms. He highlighted shifting dynamics across technology, climate change, geopolitics, and the weaponisation of capabilities as areas demanding enhanced readiness from both public and private sectors.
Key Highlights
- AI Safeguards and Human Oversight: Nageswaran underlined that the focus on AI safety and security must be pursued from both an Indian and global standpoint, ensuring that technological adoption does not compromise existing stability and that humans remain consistently in the loop.
- Preventing Algorithmic Exclusion: While acknowledging AI’s ability to spot default risks and assess credit health early, he warned against allowing AI to turn into a filter that excludes people from financial services.
- Fintech as an Enabler: Describing fintech as a sector that helps other industries harness their potential, Nageswaran noted that fintech firms often operate with less capital than traditional incumbents and make an impact in retail personal finance, SME lending, and services for self-employed borrowers.
- Real Economy vs. Financial Growth: He cautioned against setting arbitrary policy targets for the size of the fintech or financial sector relative to GDP, explaining that financial activity should naturally follow the expansion of the real economy.
- Cross-Border Payments: Nageswaran explained that while technology and regulatory frameworks are necessary foundations, the sustainable expansion of cross-border payment flows ultimately relies on growing the underlying volume of trade in goods and services.
- Human Capital and Governance: Over the next 20 years, India must prioritise the physical and mental health of its youth alongside education and skilling, as well as strengthen state capacity to enable faster decision-making.
Why This Matters
As the financial services sector integrates advanced technologies like AI, maintaining safety frameworks and human oversight is essential to prevent unintended exclusions in credit allocation. Furthermore, Nageswaran’s remarks highlight that long-term economic resilience depends on harmonising financial technology growth with the expansion of the underlying real economy and trade.
What to Watch Next
Observers will watch how financial institutions and regulators balance AI-driven efficiency gains with security and inclusion guardrails. Progress on youth health, skilling initiatives, and administrative decision-making speed will also remain central areas of focus as the public and private sectors navigate emerging structural challenges.
Frequently Asked Questions
What are the main AI-related risks highlighted by the CEA?
CEA V. Anantha Nageswaran cautioned that artificial intelligence should not become a tool or filter for exclusion and stressed the necessity of keeping humans in the loop while proactively addressing safety and security dimensions.
How can AI assist the financial sector according to the CEA?
According to Nageswaran, AI can help financial institutions assess creditworthiness more effectively and identify early indicators of financial stress and default risks.
What is required for sustainable growth in cross-border payments?
Nageswaran noted that while regulatory architecture and technology infrastructure are essential preconditions, sustainable growth in cross-border payment flows depends primarily on increasing the volume of trade in goods and services between nations.
Source: Based on reporting from ANI.