The Reserve Bank of India (RBI) on Thursday announced the formation of an eight-member committee to design a framework for the responsible and ethical enablement of artificial intelligence (FREE-AI) in the financial sector.

The panel, chaired by Professor Pushpak Bhattacharyya from IIT Bombay's Department of Computer Science and Engineering, will assess the adoption of AI in financial services globally and domestically. It will also examine regulatory and supervisory strategies for AI in the financial sector worldwide, the RBI said in a statement.

The committee will identify potential risks associated with AI and propose a comprehensive evaluation, mitigation, and monitoring framework, along with compliance requirements for financial institutions, including banks, NBFCs, FinTech firms, and payment service operators (PSOs).

Key responsibilities of the committee include recommending governance guidelines to ensure the ethical adoption of AI models and applications in the Indian financial sector.

Other members of the committee are Debjani Ghosh (Independent Director, Reserve Bank Innovation Hub), Balaraman Ravindran (Head, Wadhwani School of Data Science and AI, IIT Madras), Abhishek Singh (Additional Secretary, Ministry of Electronics and IT), Rahul Matthan (Partner, Trilegal), Anjani Rathor (Chief Digital Experience Officer, HDFC Bank), Sree Hari Nagaralu (Head of Security AI Research, Microsoft India), and Suvendu Pati (CGM, FinTech Department, RBI).

The panel, announced during the RBI's December monetary policy meeting, is expected to submit its report within six months of its inaugural meeting.