SynopsisIn a recent statement, CS Setty, Chairman of the State Bank of India, underscored AI's transformative potential for the Indian banking sector. He asserted that widening credit opportunities for small businesses and farmers through AI is essential to realize India's ambition of a developed economy by 2047. Additionally, AI could refine farm-level decision-making and risk management, as banks strive to enhance defenses against advancing cybersecurity threats.IANSAI in banking must move beyond retail to farms, MSMEs: SBI chairman SettyThe next big test for artificial intelligence in Indian banking will be whether it can help expand credit access for farmers and small businesses, rather than merely improve retail services, State Bank of India Chairman CS Setty said speaking at Ficci-IBA event.While banks have already begun using AI to better understand customers, improve service, strengthen risk management and make credit processes more efficient, Setty said much of the early momentum has been in retail banking because of the large volumes of data and transactions in that segment.Also Read: In financial services, trust comes before speed; AI doesn't replace it“But I believe the more consequential question for India is where we take AI next,” Setty said. “India has set itself the ambition of becoming a developed economy by 2047. To support that ambition, the next wave of AI-led banking must take us deeper into the economy, to rural India, small businesses, and customers whose financial histories may not fit conventional models.”Setty said agriculture presents a major opportunity for AI-led banking, especially in improving credit access and risk assessment.“Agriculture, in particular, presents a significant opportunity,” he said. “AI can support better farm-level decisions, while data-driven risk assessment, digital records, and satellite imagery can help banks improve both credit access and portfolio management.”He said such adoption was already taking place in farm lending, but the key challenge was making these tools work at scale.“As we speak, a lot of such adoption is happening at the farm-lending level,” Setty said. “The challenge is to take these capabilities beyond pilots and make them affordable, practical, and accessible at the last mile.”Also Read: Finance panel calls for AI checks for tax refundsAt the same time, Setty warned that banks will have to strengthen their defences as AI adoption grows, because more advanced technology could also create more advanced threats.“Increased use of AI is introducing new vulnerabilities,” he said. “More sophisticated technology can create even more sophisticated cyber threats. Fraud can evolve at a speed that conventional systems may struggle to match.”Banks, therefore, will need to expand AI adoption and strengthen risk controls simultaneously, he said.“Banks will, therefore, have to strengthen their defenses at the same time as they expand their use of AI,” Setty said.He also said trust must remain at the core of banking as AI systems become more autonomous.Setty said autonomous AI systems would require banks to think more carefully about oversight, model risk, transparency and responsibility.Read More News on...moreless