RBI Warns: Tech Amplifies Financial Risks

Reserve Bank of India Deputy Governor Rohit Jain has identified critical risks associated with the increasing integration of emerging technologies in finance. He pointed to speed, concentration, and opacity as key concerns that technology can amplify.

Jain explained that automated systems can escalate errors due to their rapid decision-making capabilities. Furthermore, a growing reliance on a limited number of technology providers poses a significant vulnerability, as disruptions could affect multiple institutions simultaneously.

He also addressed the challenge of opacity in advanced models, emphasizing that accountability cannot be outsourced. Despite technological advancements, traditional financial risks such as borrower defaults and liquidity stress remain, though technology can alter their scale and transmission.

The Deputy Governor advocated for a regulatory framework that balances innovation with financial stability. He suggested focusing on outcomes like fairness and resilience, while allowing for experimentation under stringent safeguards, particularly for high-consequence use cases.

In addition to his remarks, Jain launched RBI's expanded Forex Multicurrency facility, which now includes the euro, British pound, Swiss franc, Canadian dollar, and UAE dirham alongside the US dollar.