A new report released by the Reserve Bank of India (RBI) states that generative Artificial Intelligence (AI) has the potential to improve banking operations in India by up to 46%, highlighting the transformative role of technology in making financial services more efficient, inclusive and customer-centric. According to the report, financial institutions in India are rapidly adopting AI technologies to enhance operational efficiency, understand customer behaviour, boost employee productivity, and increase revenue generation while reducing operational costs.

One of the key drivers of this adoption has been the expanding role of data-driven decision-making and advanced analytics, which allow institutions to monitor risks more effectively and optimise everyday operations. Generative AI, specifically, is helping banks and financial institutions design more personalised products and services at scale, creating tailored customer experiences and improving overall user engagement.

Improving Access to Credit and Financial Inclusion

The RBI report emphasises that AI-powered alternative credit scoring models are proving especially valuable in expanding access to credit for individuals who are not served by traditional banking systems. In a country like India—where a significant portion of the population remains outside the formal financial system—AI can help evaluate the creditworthiness of “thin-file” or “new-to-credit” customers by analysing non-traditional data such as utility bill payments, mobile usage patterns, Goods and Services Tax (GST) filings, and even e-commerce transaction data.

By drawing insights from such alternative data sets, generative AI is enabling banks and non-banking financial companies (NBFCs) to assess risk levels more accurately, thereby making it possible to offer small-ticket loans to individuals and small businesses who were previously excluded from formal financial services. This has helped in broadening the scope of financial inclusion while supporting the government’s vision of digital-first growth.

Enhancing Customer Service and Operational Efficiency

The report also highlights the growing use of AI chatbots in the financial services sector. These chatbots are now capable of handling routine customer inquiries 24×7, leading to faster response times and higher levels of customer satisfaction. This allows human staff to focus on more complex and value-added tasks. As a result, banks have been able to streamline processes, reduce call centre overhead costs, and improve customer experience across digital platforms.

Generative AI is further helping institutions detect fraud patterns, develop automated compliance tools, and create predictive models that identify potential loan defaults before they occur. These developments are reducing the operational burden on banks and enhancing their ability to maintain financial stability and risk resilience.

Future Growth and Global Trends

The adoption of AI in banking is growing rapidly around the world, and India is emerging as one of the most promising markets for fintech innovation. The report anticipates that the generative AI sector in India could grow at an annual rate of 28–34%, potentially exceeding ₹1.02 lakh crore (US$ 11.64 billion) by 2033. The RBI noted that the technology will not only boost efficiency but also make a direct contribution to revenue growth in the financial services industry.

Industry analysts believe that AI adoption in banking could transform India’s financial landscape over the next decade. By leveraging technology, banks will be able to launch customised financial products, target underserved populations, and generate data-driven insights that support long-term strategic planning. The report also emphasises the importance of responsible AI adoption, highlighting the need for data privacy, ethical algorithmic decision-making, and robust regulatory frameworks.

Conclusion

In conclusion, the RBI Report indicating that generative AI could improve Indian banking operations by 46% underscores the immense potential of technology to reshape the financial sector in India. By enabling alternative credit scoring, personalised services, faster customer support, and more efficient internal processes, AI is poised to strengthen financial inclusion while also boosting productivity and profitability.
With the generative AI sector expected to grow rapidly in the coming years, Indian banks and financial institutions are likely to see significant operational improvements, enhanced customer satisfaction, and stronger risk management capabilities. This evolution towards data-driven innovation is set to make Indian banking more inclusive, efficient and future-ready, supporting the broader goals of sustained economic growth and digital transformation.

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