Addressing CNBC-TV18's Banking Transformation Summit, Murmu said Indian banks have healthy capital positions and strong profitability. But financial strength alone does not measure their success: serving people with limited banking access and contributing to India's economic growth also matter.

He pointed to borrowers such as village residents and small entrepreneurs who struggle to obtain loans because they lack a borrowing track record. Banks could use AI to assess other information, including GST returns, electricity payment records, mobile usage and business cash flows, to identify potential borrowers overlooked by conventional assessments.

Murmu also cautioned bankers against becoming overly dependent on algorithms. Technology may help assess an application, but it cannot take over the responsibility or judgment of the people handling it. Boards and senior executives remain answerable for decisions involving AI and need effective oversight to control the associated risks.

Customer transparency was another priority. Murmu said banks should inform customers when automation is involved in decisions affecting their money. Customers dissatisfied with such outcomes should also be able to seek a review by a person. Banks cannot use software failures as an excuse for unfair treatment or incorrect lending decisions.