India's RBI Issues Draft Framework for Managing Credit Model Risk Covering AI Tools

According to Reuters, on June 24, the Reserve Bank of India issued a draft framework for managing credit model risk, applicable to commercial banks, cooperative banks, non-banking financial companies, and other financial institutions. The proposal requires board-approved policies, model inventories, independent validation before deployment and at least annually, and supervisory access to third-party model documentation. The framework covers AI and machine-learning tools used in credit decisions, marking the RBI's first explicit system-wide proposal on credit model governance.
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