The Reserve Bank of India (RBI) has partnered with global consulting firms McKinsey and Company India LLP and Accenture Solutions Pvt Ltd India to bring about a groundbreaking transformation in its supervisory functions using artificial intelligence (AI) and machine learning (ML). This collaboration aims to revolutionize the RBI’s oversight of banks and non-banking financial companies (NBFCs) by harnessing the power of advanced analytics.
The RBI’s decision to leverage AI and ML in its supervisory processes showcases its strong commitment to financial stability and the protection of depositors’ interests. By tapping into its vast database and employing cutting-edge technologies, the central bank seeks to refine its regulatory supervision and embrace innovation in its operations.
After an extensive selection process that began in September of the previous year, the RBI chose McKinsey and Company India LLP and Accenture Solutions Pvt Ltd India as its partners. The collaboration, valued at approximately Rs 91 crore, will involve close cooperation between these renowned consultancy firms and the RBI’s Department of Supervision.
While the RBI already utilizes AI and ML in its supervisory activities, this collaboration aims to take these efforts to new heights. By analyzing the rich repository of data at its disposal, the RBI aims to identify attributes that can be utilized to develop more robust and insightful supervisory inputs.
The RBI’s supervisory jurisdiction extends across a wide range of financial institutions, including banks, NBFCs, payment banks, small finance banks, and more. The application of AI and ML techniques, commonly known as ‘suptech’ and ‘regtech’, aligns with the global trend of regulatory and supervisory authorities adopting innovative approaches to enhance oversight.
Key aspects of the RBI’s initiative include real-time data reporting, efficient data management, and dissemination through AI and ML technologies. These advancements streamline data collection and reporting processes, which are crucial for effective supervision. Moreover, AI and ML facilitate proactive monitoring of various risks faced by supervised entities, such as liquidity, market, and credit exposures. This technology also aids in conducting misconduct analysis and identifying cases of product mis-selling.
By leveraging AI and ML, the RBI aims to enhance its regulatory supervision, ensuring greater efficiency and effectiveness in safeguarding the stability of the financial sector and protecting the interests of depositors. This collaboration with McKinsey and Company India LLP and Accenture Solutions Pvt Ltd India signifies the RBI’s commitment to staying at the forefront of technological advancements and leveraging them to bring about positive change in its supervisory functions.
