Artificial Intelligence and Machine Learning in Banking: A Legal Perspective
Keywords:
Artificial Intelligence (AI), Machine Learning (ML), legal intricacies, algorithmic bias, legal safeguardsAbstract
Artificial intelligence (AI) and machine learning (ML) are rapidly transforming the banking sector,
bringing significant efficiency gains, fraud detection capabilities, and tailored customer experiences. Nevertheless, this integration also brings about new legal intricacies. This blog explores the burgeoning application of AI and ML in banking through legal lens. We explore the regulatory environment, examining how current frameworks address challenges such as data privacy, algorithmic bias, and accountability concerning decisions driven by AI. The article further explores challenges concerning the explainability of AI models and potential consumer protection concerns arising from their use. By critically examining these issues, we aim to illuminate a path towards responsible and legally compliant adoption of AI and ML in banking, fostering financial innovation alongside robust legal safeguards.
References
The Information Technology Act, 2000.
The Banking Regulation Act, 1949.
The Constitution of India, 1950.
Justice K.S. Puttaswamy (Retd.) vs Union of India, 2017 (10) SCC 1, AIR 2017 SC 4161.
Supra 1n.
Ibid.
The Indian Contract Act, 1872.
Supra 2n.
Ibid.
Reserve Bank of India. Reserve Bank of India Bulletin. 2022 May;76(5):1–163.
Ibid.
Shreya Singhal vs Union of India, 2015 (5) SCC 1.
RBI vs Jayantilal N. Mistry, 2016 (3) SCC 525.
HDFC Bank Ltd. vs Kumari Reshma and Others, 2014 (2) SCC 625.
The Personal Data Protection Bill, 2019.
Supra 1.
Reserve Bank of India. (2024). Harnessing Digital Technologies in Central Banks: Opportunities and Challenges - Michael Debabrata Patra. [online] RBI Bulletin. Available from: https://m.rbi.org.in//scripts/BS_ViewBulletin.aspx?Id=22389.
Bank for International Settlements (BIS). (2022). The Basel Committee on Banking Supervision’s Guidelines on AI and ML. Newsletter on artificial intelligence and machine learning. [online] Available from: https://www.bis.org/publ/bcbs_nl27.htm.
