RBI alert about AI-driven cyber risks: Governor

RBI's monetary policy statement — RBI Governor Sanjay Malhotra highlighted concerns regarding emerging cyber threats from artificial intelligence in banking systems

New Delhi: RBI Governor Sanjay Malhotra on Friday said the central bank and other banks are alert about emerging cyber risks posed by artificial intelligence (AI) agents and are taking measures to identify and plug vulnerabilities in their IT systems.

Referring to reports of AI agents operating in test mode that allegedly attacked banks overseas and stole data, Malhotra said such risks were real but could be addressed by keeping banking systems secure.

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There are reports that major US banks have detected third-party AI agents inside customer accounts, raising concerns that automated tools could act beyond instructions given by customers.

"Our banks, the government as well as the RBI, we have alerted them, and they are conscious about it and they are taking measures to ensure that such kind of vulnerabilities, wherever they are, are plugged," he said at the NDTV World Summit.

The statement comes in the backdrop of the State Bank of India (SBI) acknowledging suspected exposure of 3,897 customer records with personally identifiable information on the dark web.

The RBI Governor said the central bank has a strong team, appropriate regulations and supervisory mechanisms, along with experts who audit the IT systems of major banks and non-banking financial companies (NBFCs).

The RBI is in continuous dialogue with banks and NBFCs to strengthen their IT infrastructure and ensure compliance with the prescribed regulations, he said.

Malhotra said the focus is on two key areas - data security and protection against cyberattacks - that could disrupt banking systems and cause downtime.

While the RBI has a robust regulatory and supervisory framework, the rapid pace of software development means that vulnerabilities can sometimes emerge, he said.

"It is our endeavour that we identify these vulnerabilities as soon as possible and plug them through the patches that have to be deployed in these IT systems," he added.

On the FCNR deposit repayment, Malhotra said, the RBI has sufficient reserves and time to pay back the foreign currency non-resident (bank) deposits it garnered under its special concessional window.

"I am very optimistic that our external sector is very resilient, very strong. We already have sufficient money and reserves to pay that, but we will have even more than that. And the average deposit size is four years plus, so we have sufficient time to repay," he said.

On June 8, the RBI unveiled a facility under which it would bear the full hedging costs for banks raising fresh 3-5 year FCNR(B) deposits, which closed on August 31, a month ahead of the original deadline.

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The RBI received USD 132.98 billion worth of FCNR(B) deposits under the scheme.

Malhotra expressed confidence that India's external sector is very strong in the medium-term.

"I am optimistic that in the medium term the balance of payments and the external situation is going to be strong," he said.

"We already have sufficient forex reserves by all metrics. We built on them, we reinforced them, through the FCNR(B) scheme as you are aware. All other parameters, like services exports, remittances, among others, also point to a strong external sector in the medium-term," he added.