Project ‘Kill Switch’: Can RBI Protect Banks, NBFCs From Rogue AI Actors?

To enhance the guardrails of AI’s use by banks and financial institutions, the Reserve Bank of India (RBI) has proposed a comprehensive framework for managing risks arising from AI. Under the RBI’s “Guidance on Regulatory Principles for Model Risk Management, 2026”, key proposals include regulated financial institutions to establish explainability thresholds for AI, implement safeguards against its hallucinations, test systems under abnormal scenarios and adversarial attacks, monitor bias and di