--- title: "AI in India’s Financial Sector: Navigating the Regulatory Landscape · AI Fault Line" url: https://aifaultline.com/research/p/doi-10-21098-jcli-v5i2-419/ description: "AI Fault Line is a neutral, evidence-cited field guide to why experts looking at the same developments disagree about AI's effect on productivity, jobs, inequality, regulation and the pace of change." --- [Research](https://aifaultline.com/research/) # AI in India’s Financial Sector: Navigating the Regulatory Landscape Mohammed Afzal, Maryam Meraj, Mohd Shamim Ansari · Journal of Central Banking Law and Institutions · 19 May 2026 [Read original source](https://doi.org/10.21098/jcli.v5i2.419) Open access Where this sits in the debate - [Should governments act on AI now?](https://aifaultline.com/debate/regulation/) · its finding supports the claim ([why studies differ](https://aifaultline.com/debate/regulation/#why)) Direction of the finding as read from the abstract by an AI model ([AI-written](https://aifaultline.com/about/)). ## Key takeaway [AI-written](https://aifaultline.com/about/) Using stakeholder interviews, surveys and a comparison with the EU AI Act and US sector rules, this study finds gaps in accountability, transparency and enforcement in India's governance of AI in finance, especially for credit scoring. It proposes a hybrid model: binding rules for high-risk systems and co-regulation for low-risk tools. ## Abstract Artificial Intelligence (AI) integration in India’s financial sector offers transformative potential but poses challenges like algorithmic bias, data privacy risks, and regulatory fragmentation. This study employed both one-on-one interviews and surveys with various stakeholders in the financial services sector to analyse India’s AI governance framework through expert interviews and a comparative policy analysis of global models (the EU’s risk-based AI Act and the US sector-specific guidelines). Findings reveal gaps in accountability, transparency, and enforcement mechanisms, particularly for high-risk applications like credit scoring. This study proposes a hybrid regulatory model that combines binding rules for high-risk AI systems (e.g., fraud detection) with co-regulation for low-risk tools, emphasising scientific risk assessment, consumer grievance mechanisms, and iterative policymaking. While leveraging India’s existing financial laws (e.g., Reserve Bank of India guidelines), we recommend AI-specific updates to address explainability, bias audits, and systemic risk monitoring. However, this study is limited by its reliance on publicly available regulatory documents and expert interviews, and by its focus on the Indian context, which may overlook cross-border AI governance challenges. Stakeholder collaboration and phased implementation are critical to balancing innovation with ethical safeguards in India’s evolving digital economy. ## About this publication **Academic journal.** Published in an academic journal — typically peer-reviewed before publication, though indexing alone doesn't guarantee review depth. Published 2026 (5 months ago) Citations 0 (OpenAlex) 0 citations recorded by OpenAlex — too few 2026 papers in this collection for a fair comparison. [Chart: published 2026] ## More on this topic Related by theme, not necessarily by method or conclusion. - [Artificial Intelligence and Institutional Transformation across Regulatory Economic and Knowledge Systems](https://aifaultline.com/research/p/doi-10-64771-jsetms-2026-v03-i06-pp131-146/) Journal of Science Engineering Technology and Management Sciences · 2026 - [Governing the Ungovernable: Structural Contradictions, Institutional Limitations, and the Constraints of State Authority in AI Regulation in China and the United States](https://aifaultline.com/research/p/doi-10-30574-wjarr-2026-30-3-1617/) World Journal of Advanced Research and Reviews · 2026 - [Governing the Ungoverned: A Framework for Responsible AI Deployment in Nigeria’s Informal Economy](https://aifaultline.com/research/p/doi-10-59256-ijrtmr-20260603031/) International Journal Of Recent Trends In Multidisciplinary Research · 2026 - [Digitalization, AI Adoption, and MSME Productivity: An Ibn Khaldunian Perspective](https://aifaultline.com/research/p/doi-10-22373-share-0060/) Share Jurnal Ekonomi dan Keuangan Islam · 2026 Overview assembled automatically from collected metadata. [How this site is built](https://aifaultline.com/about/).