Project ‘Kill Switch’: Can RBI Protect Banks, NBFCs From Rogue AI Actors?

by · Inc42

SUMMARY

  • The RBI has proposed one of India's most comprehensive AI governance frameworks, requiring banks and regulated entities to have the ability to instantly override, suspend or deactivate AI systems through a "kill switch" arrangement.
  • The draft introduces mandatory model inventories, independent validation of third-party AI systems, explainability requirements and board-level accountability for AI-driven decisions.
  • Industry executives believe the framework could slow reckless AI deployments in financial services while forcing banks and NBFCs to treat AI governance as an enterprise risk discipline.