For this, the central bank is also considering to appoint external experts.
when reserve Bank of India Already using AI and ML in supervisory processes, it now wants to upgrade it to ensure that the benefits of advanced analytics are passed on to the supervisory department in the central bank.
The department is developing and using linear and some machine-learned models for supervisory examinations.
The supervisory jurisdiction of RBI selects banks, urban co-operative banks (UCBs), NBFCs, payments banks, small finance banks, local area banks, credit information companies and pan-India financial institutions.
It continuously monitors such entities with the help of on-site inspection and off-site monitoring.
The central bank has issued an Expression of Interest (EoI) to engage consultants in the use of advanced analytics, artificial intelligence and machine learning to generate supervisory inputs.
“Keeping in mind the global supervisory applications of AI and ML applications, the project is envisioned with the RBI through the engagement of external experts and the use of advanced analytics and AI/ML to expand the analysis of vast data stores externally. is intended for use, which is expected to enhance the effectiveness and acuity of supervision,” it said.
Among other things, the selected consultant will be required to trace and profile the data with a supervisory focus.
The EoI said it aims to enhance the data-driven monitoring capabilities of the Reserve Bank.
Across the world, regulatory and supervisory authorities are using machine learning techniques (commonly referred to as ‘supertech’ and ‘regtech’) to aid supervisory and regulatory activities.
Most of these techniques are still exploratory, however, they are rapidly gaining popularity and scale.
On the data collection side, AI and ML technologies are used for real time data reporting, effective data management and dissemination.
For data analytics, these are being used to monitor supervised firm-specific risks, including liquidity risk, market risk, credit exposure and concentration risk; Malpractice Analysis; and mis-selling of products.