Generative AI set to improve banking operations in India by 46%: RBI Report
The central bank noted that AI can help financial institutions better understand customer behaviour, improve efficiency, and offer more personalised services at scale.
It stated, "GenAI is poised to improve banking operations in India by up to 46 per cent".
The report said AI is increasingly being adopted across the financial services sector. This adoption is being driven by multiple needs, including enhancing customer experience, improving employee productivity, increasing revenue, reducing operational costs, ensuring regulatory compliance, and enabling the creation of new and innovative products.
As per report, Generative AI, in particular, is playing a major role by using advanced analytics to help institutions understand customer behaviour, manage risks more effectively, and control costs.
AI-powered alternative credit scoring models are also helping expand credit access to people who are underserved by the traditional banking system.
RBI also stated that in India, where millions of people still do not have access to formal banking, AI can help assess the creditworthiness of potential borrowers using non-traditional data sources.
These may include information such as utility bill payments, mobile usage patterns, GST filings, or e-commerce transactions. Such technology can help bring "thin-file" or "new-to-credit" customers into the formal financial system.
The report also pointed out that AI chatbots are transforming customer service by handling routine queries around the clock, providing faster resolutions, and freeing up human staff for more complex tasks.
Globally, the adoption of AI in financial services has been growing rapidly.
The RBI report said that AI is expected to directly contribute to revenue growth for the industry in the coming years. The generative AI segment alone is projected to exceed ₹ 1.02 lakh crore (about USD 12 billion) by 2033, growing at an annual rate of 28-34 per cent.
The findings highlighted that with proper use, AI can make banking in India more efficient, inclusive, and customer-friendly while driving strong growth for the sector. (ANI)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hindustan Times
an hour ago
- Hindustan Times
Kin of AI-171 crash ground victims hire US law firm
Families of 10 people killed on the ground in the Air India Flight AI-171 crash have hired Beasley Allen, the prominent US aviation law firm that secured billions from Boeing over the 737 MAX disasters, as the firm expands its representation of those affected by the tragedy in Ahmedabad on June 12. Kin of AI-171 crash ground victims hire US law firm The firm, led by aviation attorney D Michael Andrews, is exploring product liability claims against Boeing in US federal courts and Montreal Convention claims against Air India in UK courts, though no lawsuits have been filed yet. Andrews travelled to India in August to meet families across Gujarat and Mumbai, signing his 10th ground victim family on August 11. Among those killed was Maheshbhai Kalavadia, a Gujarati film producer from Naroda who had attended a meeting at Law Garden before calling his wife at 1:15 pm to say he was heading home. His remains were found 700 metres from the crash site and identified through DNA matching. 'These were innocent people who had nothing to do with the flight - they weren't even passengers,' said a relative who met Andrews. 'They were just going about their normal day when this tragedy struck.' The Boeing 737 MAX cases that established Beasley Allen's reputation involved crashes that killed 346 people between 2018 and 2019. Boeing ultimately paid $2.5 billion under a 2021 deferred prosecution agreement and settled more than 90% of claims, acknowledging liability for crashes caused by the faulty Maneuvering Characteristics Augmentation System (MCAS) it built into the jets. Andrews has taken on the case of victims killed in the medical college hostel where the plane crashed, including two people in the food preparation area and medical students in the mess hall, and also represents the family of a husband and wife killed while on a scooter for document verification. The firm is pursuing a water leak theory, focusing on the Boeing 787-8's electrical and equipment bay beneath the cockpit that houses flight computers including FADEC and TCMA systems capable of autonomous aircraft control. 'Above that and in those same areas, there are water lines and couplings that are known to have leaked on prior 787-8 aircraft,' Andrews explained, referencing Boeing service bulletins about coupling leaks that can allow water into computer equipment. The firm is filing Right to Information requests in India and Freedom of Information Act requests in the US to obtain complete flight data recorder information for independent expert analysis, Andrews told HT. Andrews met the sole survivor Ramesh and other families during his India visit, saying conversations were brief and private. He plans to file cases separately for each victim but has no fixed timetable pending data collection.
The Hindu
2 hours ago
- The Hindu
The Sisyphean quest to bolster manufacturing in India
78 Years of Freedom The Narendra Modi government's quest to bolster the domestic manufacturing sector is not the first time a government has tried this. In fact, the manufacturing sector has been the focus of government policy — in one way or the other — ever since 1956, to relatively modest success. At the time of Independence or thereabouts, the Indian economy looked very different from its current state both in terms of size as well as composition. At the time, agriculture was the overwhelmingly dominant driver of the economy, contributing about half of the country's Gross Domestic Product (GDP), as per data with the Reserve Bank of India. The nascent manufacturing sector, on the other hand, made up about 11% of the GDP. Now, the services sector has taken over the dominant role vacated by agriculture, while manufacturing has remained largely where it was. The first Five Year Plan (1951-56) focused on the idea of increasing domestic savings, since it was presumed that higher savings would directly translate into higher investments. This policy, however, ran into a fundamental problem: investments could not materially increase as the country did not have a domestic capital goods producing sector. The second Five Year Plan (1956-61), based on the ideas of PC Mahalanobis, and successive Plans sought to address this by increasing investments in the capital goods producing sectors themselves. The idea was to increase government investment in capital goods production, while the micro, small, and medium enterprises (MSMEs) would cater to the consumer goods market. As the economist and professor Aditya Bhattacharjea noted in a paper published in Springer Nature: 'With long-run growth being seen as the means for reducing widespread poverty, the model provided an intellectual justification for increasing investments in the capital goods sector of a labour-abundant country.' So, what followed was that growth rates of both investment in and output of the machinery, metals, and chemicals industries outpaced those of consumer goods industries. The Mahalanobis model did not incorporate specific industry-wise policies, but it had a few broad themes that came to characterise India's industrial policy over the country's first three decades since Independence. The first and most obvious theme was the huge role of the public sector. The feeling at the time was — not unlike what the Modi government felt in the wake of the COVID-19 pandemic — that private sector investment would not be picking up the load for some time, and so the public sector would have to do the heavy lifting. The 1948 Industrial Policy Resolution (IPR) reserved the production of arms and ammunition for the Union government, and new investments in sectors as diverse as iron and steel, aircraft, ships, telephone, telegraph and wireless equipment were kept as the exclusive domain of central public sector enterprises. The 1956 IPR, which came after the historic Avadi session of the Indian National Congress in 1955, expanded the reserved list to 14 sectors. The driving ideology was that the government and the public sector would assume the 'commanding heights' of the economy. The second and equally significant theme of this thought process was the use of licensing as a means to ensure that scarce resources were allocated to priority sectors. Third, the belief was that the domestic industry would need to be protected from international competition, and this protection took the form of high tariffs — something U.S. President Donald Trump seems to have a problem with even today — and import licensing. By 1980, the share of manufacturing in India's GDP had grown to about 16-17%. According to some economists like Pulapre Balakrishnan, the real growth in the manufacturing sector took off from here, and not from the 1991 liberalisation, as is often assumed. This, they said, was due to a few policy changes enacted by the government of the time: allowing up to 25% automatic expansion of licensed capacities, allowing manufacturing licences to be used to produce other items within the same broad industrial category, and significant relaxation of price controls on cement and steel. The 1991 reforms and the resultant end of the 'licence raj', the opening up of the economy to the private sector and international competition further helped things, with the manufacturing sector growing strongly and contributing a steady 15-18% of a rapidly-growing GDP till about 2015. Steep fall That year saw a marked change, however, with the share of manufacturing in GDP consistently falling for the next decade. A major reason for this change was the non-performing assets (NPA) crisis in the banking sector. Profligate lending by banks in the 2009-14 period led to a build-up of bad loans, which came to light in 2015-18 following an Asset Quality Review of the banking sector. Such was the crisis and its fallout that bank lending to large industry virtually dried up. This, coupled with the loan-fuelled over-capacity that had been created during the 2009-14 period meant that companies did not need to invest in additional capacity to meet demand, and could not find adequate credit even if they wanted to invest. Underpinning all of this was the increased reliance on imports from China, which virtually converted large parts of Indian manufacturing into assembly and repackaging units. Of course, the COVID-19 pandemic also severely hampered both demand and investments in India. The Modi government's Make in India efforts, thus, could not prevent the share of manufacturing in GDP falling from 15.6% in 2015-16 to 12.6% in 2024-25 — the lowest share in 71 years. Another problem faced by the Modi government, something all previous governments also faced, was that a lot of the reforms to drive manufacturing were needed at the State level. So, while the Union government has put in place the framework for land and labour reforms that could potentially increase the scale of Indian manufacturing, they are held up as most State governments are not cooperating. The services sector, on the other hand, has gone from strength to strength on the back of the IT boom. So, where services made up 37% of the GDP in 1950, this grew to 42% by 1996-97. Thereafter, the acceleration was rapid, with the sector now making up nearly 58% of the GDP. So, 78 years after Independence, the manufacturing sector remains an also-ran in India's growth story, despite fervent attempts by government after government. The services sector, on the other hand, has blossomed outside the government's focus.
Economic Times
3 hours ago
- Economic Times
Bank of Azad Hind: When Netaji gave India its own currency
Synopsis In 1944 Rangoon, Netaji Subhas Chandra Bose established the Bank of Azad Hind to fund his liberation campaign, demonstrating India's financial capabilities before independence. Capitalised by the Indian diaspora, the bank became the Provisional Government's treasury, issuing its own currency and supporting various war efforts. Image: Netaji Research Bureau It is April 1944 in Rangoon. In a vacant bungalow off Jamal Avenue, carpenters are at work turning bare rooms into a working bank. Just a week earlier, this was an empty space. Now, it is about to become the headquarters of a bank and no, this one is not the story of how the Reserve Bank of India (RBI) was birthed. This bank was under the authority of the Provisional Government of Free India, led by Netaji Subhas Chandra Bose. Five years before the RBI became fully independent in 1949, Bose launched the Bank of Azad Hind to fund his liberation campaign and to demonstrate that India could run its own financial institutions before it had even won its political freedom. Also Read: Independence Day 2025: Tryst with growth — India's economic journey from Nehru to now The short but strong saga of this bank has been well drafted in S.A. Ayer's book, "Unto Him a Witness". Ayer, who served in Bose's cabinet, wrote, 'At this stage, Netaji established the first National Bank of Azad Hind outside India in Rangoon on the 5th of April, 1944, to finance the war of India's liberation.' The 'stage' Ayer refers to was a tense moment. Bose was preparing to leave for the front in the Imphal–Kohima campaign. Japanese and Burmese authorities were sceptical about establishing a bank in wartime, fearing political complications. Some colleagues worried about capital, stability, and the timing. But Bose was unmoved and unbothered. 'Have a bank I must, and that too within a few days, before I leave for the front. I must open the bank and then go to the front,' Ayer quoted Bose as came quickly from the Indian diaspora in Southeast Asia. Ayer recounted how four Indians stepped forward to fund the initial days of the newly founded bank, with a vision of free India. 'Perhaps, you may be surprised to hear that four Indians have come forward to find between themselves all the required capital for the bank. They are prepared to write off the capital, if necessary, though I am quite sure they won't have to. In any event, they are ready to assign to the Provisional Government of Azad Hind eighty per cent of the annual profits.'This show of support ended Japanese resistance. 'That silenced the Japanese pretty effectively,' Ayer notes. What followed was a full and renewed case of dedication. Also Read: India's space race: From bullock carts to Gaganyaan'How one man, Yellappa, and the other four patriotic Indians worked like Trojans night and day for a week and converted a vacant building into a full-fledged bank — with an authorised capital of rupees fifty lakhs is a romantic story that deserves a chapter all by itself,' Ayer Fay, in his book "The Forgotten Army", recounts how Netaji's appeal in Rangoon for rupees 5 million triggered an extraordinary outpouring of support from the Indian community in Burma and Malaya, ultimately swelling the Azad Hind Bank's reserves to about 215 million rupees – more than 150 million rupees from Burma media reports and later historical accounts identify some of the most prominent donors: Abdul Habeeb Yusuf Marfani, a Gujarati businessman in Rangoon, is said to have pledged his entire fortune of roughly 1 crore rupees; the Betai family, Hiraben and Hemraj, reportedly contributed 50 lakh rupees in cash and assets; and Iqbal Singh Narula famously offered silver equal to Netaji's own Bank of Azad Hind soon became the treasury of the Provisional Government. 'The funds of the Provisional Government were banked with this bank,' Ayer wrote. It accepted donations 'in cash as well as in kind' from traders, shopkeepers, and plantation workers. These resources funded soldier pay, procurement, propaganda, and relief efforts. Also Read: UPI and beyond: The great Indian banking leap The bank even issued its own currency, denominated in rupees, which circulated in INA-controlled territories, a symbolic assertion of monetary sovereignty even if it carried no value in British himself served as chairman. 'The National Bank of Azad Hind was established in Rangoon in April 1944. I know a man called Dina Nath. He was one of the Directors of the Bank. I was the Chairman of the Bank,' he institution's life was brief. It closed by the end of World War II or precisely after the INA's retreat and the fall of Rangoon. But decades later, it resurfaced in an unexpected way. Following the Modi government's decision in 2016 to declassify files related to Bose, the finance ministry began receiving unusual petitions. Several borrowers wrote offering to repay their loans using Azad Hind Bank currency notes, some promising the bearer sums as high as ₹1 lakh. 'We have received representations from some individuals who want the currency issued by Azad Hind Bank or similar variants to be recognised as legal tender,' a government official told ET at the Reserve Bank of India, citing Section 22 of the RBI Act, 1934, rejected the requests, saying it had no record of such an entity and that only the RBI has the sole authority to issue banknotes. Some petitioners pushed back, arguing the RBI 'itself was formed by the British' and that the government should take a fresh Ayer's view, the bank was never merely a repository of funds for Bose: Perhaps it was a pledge of a nation to free itself, having 'our own currency and our own bank' alongside an army and a government.
