Tolerant Supervision for AI Mistakes: RBI’s Approach to Balancing Innovation and Safeguards in Finance

Artificial Intelligence (AI) is revolutionizing India’s financial sector, driving innovations in credit scoring, fraud detection, customer service, and backend operations. However, the complexity of AI systems inevitably means mistakes can occur—whether due to algorithmic bias, data anomalies, or unexpected model behaviors. Recognizing this, the Reserve Bank of India (RBI) has proposed a tolerant supervision approach […]