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Indian banks need to take artificial intelligence beyond retail banking and use it to expand access to credit and financial services for rural India, small businesses and customers whose banking histories do not fit conventional models, State Bank of India Chairman Challa Sreenivasulu Setty said on Tuesday.
Speaking at the FIBAC 2026 annual banking conference in Mumbai, Setty said the next phase of AI-led banking must focus on translating technological capabilities into economic opportunities as India works towards its ambition of becoming a developed economy by 2047. "To support that ambition, the next wave of AI led banking must take us deeper into the economy, to rural India, small businesses and customers whose banking histories may not fit conventional models," Setty said. He said agriculture presents a significant opportunity for the use of AI, with the technology supporting better farm-level decisions, while data-driven risk assessment, digital records and satellite imagery could help banks improve credit access and portfolio management. "The challenge is to take these capabilities beyond pilots and make them affordable, practical and accessible at the last mile," Setty said. Setty said banks have already started using AI to understand customers better, improve services, strengthen risk management and make credit processes more efficient, with much of the early momentum coming from retail banking. However, he said the more consequential question for India is how banks take AI into other parts of the economy. The SBI chairman also cautioned that greater use of AI would bring new vulnerabilities, including more sophisticated cyber threats and fraud that could evolve rapidly. "Banks will therefore have to strengthen their defenses at the same time as they expand their use of AI," he said, adding that banking is ultimately built on trust. Setty said the growing use of increasingly autonomous AI systems would also require banks to rethink oversight, model risk, transparency and responsibility. "The more consequential the decision, the greater must be our emphasis on human accountability," he said. He also highlighted the need to prepare the banking workforce for an AI-led environment, saying banks would have to equip their employees for the changing nature of work. "The real test of AI will not be how sophisticated our technology becomes, but what it enables us to accomplish," Setty said, adding that AI should help small businesses obtain timely credit, manage risk and improve productivity while making financial systems safer and more resilient. "Going forward, AI will be more than the next chapter in the technology story of banking, it can become an important instrument in India's economic progress," he said. (ANI)
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