State Bank of India (SBI) Chairman C S Setty has called for artificial intelligence (AI) in banking to move beyond its initial applications and reach rural customers, small businesses and the agricultural sector. Setty said the true test of AI would not be the sophistication of the technology but its economic impact—whether it can help small businesses access timely credit, improve productivity and make financial systems safer and more resilient. While banks have initially focused on AI applications in retail banking, Setty said the next major opportunity lies in taking the technology deeper into the wider economy.
However, the growing use of AI will also create new cybersecurity risks. He stressed that banks must strengthen their defences as they expand AI adoption, while maintaining trust as the foundation of banking. Setty also highlighted the need for stronger governance as AI systems become more autonomous. Model risk, transparency, explainability and human accountability will become increasingly important, particularly when AI is involved in critical financial decisions.
The AI transition will also require banks to prepare their workforce for changing roles and operating models. India’s banking sector, supported by healthy asset quality, strong capital and sustained profitability, is well placed to adopt AI, Setty said. He suggested that AI could ultimately become more than a technological tool for banks, serving as an important instrument for broader economic development and financial inclusion.
