The Reserve Bank of India (RBI) Governor Sanjay Malhotra on Tuesday said the Artificial intelligence (AI) will be central to tackling AI-driven fraud. He said the traditional rules-based systems struggle to keep pace with rapidly adapting fraudsters

While speaking at the FIBAC 2026 conference, he said, “It is AI and AI alone that can help limit AI frauds.”

He further explained the need for AI-based fraud detection, and said, “Fraud today moves at the speed of an API call. A rules-based fraud engine, however well designed, is perpetually one step behind a fraudster who adapts more frequently. It is only machine-learning models which continuously learn from transaction patterns and can identify anomalies in real time rather than after the loss has crystallised.”

Governor Malhotra said AI would require changes in how financial institutions assess risk, serve customers, price capital and organise their operations.

“AI is a shift to how we evaluate risk, serve customers, price capital, organise institutions. Many of the banks are already doing it, some of them are considering doing it. The important question is: whether you share the AI journey or you let AI shape you,” he said.

AI Adoption Alone Won’t Decide Banking Winners

Governor Malhotra said that the banks that succeed in the AI era will not necessarily be those that adopt the technology fastest or most extensively, but those that understand what they are deploying and maintain clear accountability for its outcomes.

The Reserve Bank sees AI as a capability to be responsibly harnessed and not merely as a risk to be contained, he added.

He further said, “Doing business, doing banking, and so on, requires a total change in mindset. It’s a shift in how we evaluate risk, serve customers, price capital, organize institutions. Happy to know many of the banks are already doing it. Some of you are considering doing it.”

“The only question now before us is whether you shape the AI journey or you let it shape you by default.”

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