Seven international consulting firms, including Pricewaterhouse Coopers, McKinsey, and Boston Consulting Group (India), have been shortlisted by the Reserve Bank to deploy artificial intelligence and machine learning for supervisory tasks.
The RBI wants to make substantial use of artificial intelligence, machine learning, and advanced analytics to analyse its massive database and enhance regulatory oversight of banks and NBFCs. The central bank intends to recruit outside consultants for this purpose.
The RBI issued a call for expressions of interest (EoI) in September of this year for hiring consultants to employ advanced analytics, artificial intelligence, and machine learning to produce supervisory inputs.
According to an RBI document, the central bank has chosen seven candidates to take part in the request for proposal (RFP) process for choosing the consultant(s) based on the examination/evaluation detailed in the EOI document.
Accenture Solutions Private Limited, Boston Consulting Group (India) Pvt Ltd, Deloitte Touche Tohmatsu India LLP, Ernst & Young LLP, KPMG Assurance and Consulting Services LLP, McKinsey and Company, and Pricewaterhouse Coopers Pvt Ltd are the seven companies.
While the RBI already employs AI and ML in supervisory procedures, it now plans to build it up so that the Department of Supervision at the central bank may gain from sophisticated analytics.
For supervisory examinations, the Department of Supervision has been creating and utilising linear and a few machine-learnt models.
According to the EoI published in September, the current focus is on examining the data to find its properties that can be used to produce new and enhanced supervisory inputs.
Banks, urban cooperative banks, non-bank financial businesses (NBFCs), payment banks, small financing banks, local area banks, credit information firms, and a few other Indian financial organisations are all subject to the RBI’s regulatory authority.
In order to safeguard the interests of depositors and maintain financial stability, it conducts supervision of these companies with the goal of evaluating their soundness, solvency, asset quality, governance structure, liquidity, and operational viability.
According to the EoI, the RBI conducts ongoing oversight of SEs through on-site inspections and remote surveillance.
Machine learning techniques, often known as “suptech” and “regtech,” are being used by regulatory and supervisory organisations all around the world to support their work.
Although the majority of these methods are still in the exploratory stage, they are fast expanding in scope and popularity.
AI and ML technologies are utilised for real-time data reporting, efficient data management, and data distribution on the data gathering side.
These data analytics are being used for misconduct analysis, product misselling, and monitoring supervised firm-specific hazards, such as liquidity risks, market risks, credit exposures, and concentration concerns.
