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Finance Minister Nirmala Sitharaman warned about artificial intelligence risks at the Global Fintech Fest 2026 in Mumbai. She called AI a ‘double-edged sword’ while discussing fintech innovation, fraud and systemic vulnerabilities.
Sitharaman said AI can improve fraud detection, financial efficiency and decision-making across the industry. She urged regulators and companies to expand technology responsibly without creating new risks that spread quickly.
The FM also highlighted AI, large language models and cyber threats as growing challenges for financial systems. She also warned that advanced models could influence public opinion and electoral outcomes without obvious signals.
“AI may assist judgment, but responsibility must remain human and institutional,” Sitharaman said at the event. Her comments called for stronger oversight as financial institutions increasingly rely on automated systems.
The minister argued that faster technology should not weaken resilience across critical financial infrastructure. She said regulation must support innovation while addressing risks linked to high-impact AI applications. Sitharaman also backed a ‘soft-touch regulation’ approach after discussions with the Reserve Bank of India. The approach aims to protect innovation without allowing safeguards to become unnecessary barriers.
Sitharaman welcomed the RBI’s recognition of the Unified FinTech Forum as a self-regulatory organization. The recognition came under the central bank’s SRO-FT framework on September 10. She said the move reflected changing regulatory needs across India’s rapidly expanding fintech ecosystem. The framework could also strengthen industry accountability while keeping regulatory oversight adaptable.
The minister also urged the RBI to advance its wholesale and retail Central Bank Digital Currency pilot. Her broader message focused on building technology systems that can withstand failures and misuse. Financial firms increasingly use AI for fraud monitoring, risk assessment and customer-facing financial services. Those applications can improve speed, while poorly managed systems can amplify mistakes across connected platforms.
Sitharaman also highlighted the need for human oversight around consequential AI decisions. Regulators, company boards and senior executives must understand how these systems influence financial outcomes.
Higher risk applications should receive deeper scrutiny before deployment and throughout their operating lifecycle. Such oversight can help institutions identify failures before automated decisions create wider financial consequences.
The minister further proposed a federated industry platform for Indian technology companies operating globally. The platform could help firms navigate differing rules covering data, taxation, cybersecurity and financial regulation. Sitharaman said cross-border compliance now forms an important part of global technology expansion. The platform could also support international partnerships and improve coordination around interoperable standards.
India’s young population also featured prominently in Sitharaman’s address at the fintech gathering. She said young Indians were already building companies, developing technology and shaping future economic growth. Around 8,000 organizations participated in the Global Fintech Festival, reflecting broad industry representation. Technology-related entities accounted for 43% of participants, while fintech firms represented another 20%.
Sitharaman’s warning ultimately placed resilience alongside efficiency as a central requirement for India’s AI strategy. The message signals stronger scrutiny for financial AI without suggesting that adoption should slow.
Fintech companies may therefore face greater expectations around accountability, cybersecurity and responsible AI deployment. The emerging policy direction favors innovation that makes financial systems faster without making them fragile.
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