SBI Chairman CS Setty calls for AI-led banking to reach rural India, small businesses
Mumbai, August 11
Indian banks need to take artificial intelligence beyond retail banking and use it to expand access to credit and financial services for rural India, small businesses and customers whose banking histories do not fit conventional models, State Bank of India Chairman Challa Sreenivasulu Setty said on Tuesday.
Speaking at the FIBAC 2026 annual banking conference in Mumbai, Setty said the next phase of AI-led banking must focus on translating technological capabilities into economic opportunities as India works towards its 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 banking histories may not fit conventional models," Setty said.
He said agriculture presents a significant opportunity for the use of AI, with the technology supporting better farm-level decisions, while data-driven risk assessment, digital records and satellite imagery could help banks improve credit access and portfolio management.
"The challenge is to take these capabilities beyond pilots and make them affordable, practical and accessible at the last mile," Setty said.
Setty said banks have already started using AI to understand customers better, improve services, strengthen risk management and make credit processes more efficient, with much of the early momentum coming from retail banking.
However, he said the more consequential question for India is how banks take AI into other parts of the economy.
The SBI chairman also cautioned that greater use of AI would bring new vulnerabilities, including more sophisticated cyber threats and fraud that could evolve rapidly.
"Banks will therefore have to strengthen their defenses at the same time as they expand their use of AI," he said, adding that banking is ultimately built on trust.
Setty said the growing use of increasingly autonomous AI systems would also require banks to rethink oversight, model risk, transparency and responsibility.
"The more consequential the decision, the greater must be our emphasis on human accountability," he said.
He also highlighted the need to prepare the banking workforce for an AI-led environment, saying banks would have to equip their employees for the changing nature of work.
"The real test of AI will not be how sophisticated our technology becomes, but what it enables us to accomplish," Setty said, adding that AI should help small businesses obtain timely credit, manage risk and improve productivity while making financial systems safer and more resilient.
"Going forward, AI will be more than the next chapter in the technology story of banking, it can become an important instrument in India's economic progress," he said.
— ANI
Reader Comments
Sounds good in theory but I'm worried about data privacy of rural customers. My parents in a village near Lucknow barely understand smartphones - imagine them giving biometric data to AI systems they don't understand. Banks need to ensure strong safeguards before rolling this out. Also, what happens to the bank employees who will be retrained? Are we creating a digital divide within the workforce itself?
As a small business owner in Pune, I've been trying to get a loan for my textile unit for 6 months. The traditional credit assessment doesn't capture my actual turnover because my buyers pay in cash sometimes. If AI can create a more holistic picture using GST data, digital payments, and even social media business pages, that would help thousands like me. SBI chairman is speaking the right language! आखिरकार हमारी बात सुनी गई 🙏
Interesting perspective from the SBI Chairman. Coming from a background in US fintech, I've seen how AI-driven credit scoring helped underbanked immigrant communities access financial services. India has a unique opportunity to leapfrog legacy systems - UPI is proof of that. But the cybersecurity concern he raised is spot on. As transactions become autonomous, the attack surface grows exponentially. Let's hope Indian banks invest as much in defense as they do in innovation.
The point about human accountability is crucial. AI can recommend a loan, but who takes responsibility when someone defaults due to an algorithm error? Also, let's not forget the digital literacy gap - my grandmother in Kerala still prefers visiting the branch for everything. If banks go too AI-heavy, what about senior citizens and rural folks who can't adapt easily? We need a hybrid model where AI assists but doesn't replace the human touch completely.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.