RBI Deputy Governor Shirish Chandra Murmu has asked Indian banks to rethink how they use Artificial Intelligence (AI). Speaking at the CNBC-TV18 Banking Transformation Summit, he said that AI should not only be used to make bank work faster (efficiency). Instead, it should be used to bring new customers into the banking system who were previously ignored. This is called financial inclusion, which means making sure everyone has access to bank accounts and loans.

Mr. Murmu praised the current state of Indian banks, saying they are strong and have enough capital (money kept as a safety net). They are also making good profits. However, he warned that a bank's success is not just about having a big balance sheet. The real test is how well the bank helps poor or underserved people and supports the overall growth of the Indian economy.

For many small business owners or villagers, getting a loan is hard because they do not have a credit history (a record of past loans and payments). The Deputy Governor suggested that banks use 'alternative data' to check if these people are trustworthy. This data includes GST filings, electricity bill payments, mobile phone usage, and cash flow records. AI can analyze this data quickly to find deserving borrowers who were hidden before.

While AI is a powerful tool, the RBI official warned against 'algo-dependency.' This happens when bankers rely too much on computer programs (algorithms) and stop using their own brains. He made it clear that human judgment is still the most important part of banking. A computer can suggest a decision, but a human must be responsible for it.

Mr. Murmu told bank boards and senior management that they are fully accountable for AI-driven decisions. They must have strong governance (rules and oversight) to manage the risks of using technology. Banks cannot blame a software error if a wrong loan is given or if a customer is treated unfairly. High-level officers must stay involved in the process.

Transparency is another major point. Banks must tell customers when an automated system is making a decision about their money. If a customer is unhappy with an AI decision, they must have the right to talk to a real human staff member for a review. This is important to keep the trust of the public, which is the foundation of the banking industry.

For bank officers, the message is clear: technology is a helper, not a replacement. Aspirants and current staff should learn how AI works but must also focus on customer service and ethical lending. Trust will define the next era of Indian banking, and technology must be used to build that trust rather than break it.

Looking ahead, the RBI will likely keep a close watch on how banks deploy these tools. Banks that use AI to reach new markets while keeping human oversight will likely be the winners. The focus remains on helping the 'last mile' customer join the formal financial system through smart and safe technology.