The Reserve Bank of India is planning to extensively use advanced analytics and artificial intelligence/machine learning to analyze its vast database and improve regulatory supervision for banks and non-bank financial companies (NBFCs).
For this purpose, the central bank will hire external experts. While the RBI is already using AI/ML in supervisory processes, it now aims to upscale it to ensure that the advantages of advanced analytics can be accrued to the Department of Supervision in the Reserve Bank.
The department has been using linear and a few machine-learned models for supervisory examinations. The supervisory jurisdiction of the RBI extends over small finance banks, local area banks, credit information companies, urban cooperative banks (UCB), NBFCs, payment banks, and select Indian financial institutions.
It undertakes continuous supervision of such entities with the help of on-site inspections and off-site monitoring. The central bank has floated an expression of interest (EoI) for engaging consultants in the use of Advanced Analytics and AI/ML for generating supervisory inputs.
RBI said that taking note of the global supervisory applications of AI/ML, this Project has been conceived for the use of Advance Analytics and AI/ML to expand the analysis of enormous data repositories with RBI. This will be done externally through the engagement of external experts, which is expected to enhance the effectiveness and sharpness of supervision significantly.
Among other things, the selected consultant will be required to explore and profile data with a supervisory focus. The objective is to improve the data-driven surveillance capabilities of the Reserve Bank of India.