Mumbai: Banks that will win in the artificial intelligence (AI) era will not necessarily be the ones that adopt AI faster but the ones who adopt it with a good understanding of what they are deploying. He described the influence of AI to this decade what digitisation did in 2010s and liberalization held in the 1990s.

He said AI can be used efficiently to build, improve and expand exisiting projects like unified lending interface (ULI), account aggregator which are public good projects on top of which the private sector can build.

“AI, well deployed, can close existing gaps in financial inclusion faster than any preceding technological innovation. Deployed carelessly, it can at the same time entrench new forms of exclusion and instability at a pace that regulators and banks may struggle to keep up with,” Malhotra told bankers in his speech at the FICCI-IBA organised conference.

The RBI plans to establish a more approved AI governance policy with clear accountability. RBI will also continue to provide a sandbox as a safe space for testing innovative use cases for banks, he said.

“We have much at stake. We need to further build on our very highly successful Jan Dhan Yojana. We have still a large, underserved MSME credit market which is estimated in tens of lakhs of crores of rupees. A retail credit culture that is only now maturing. Customer service that can be lost and improved. Implementation costs that can be further decreased. And digital frauds that need to be prevented and avoided. We need to leverage AI for this,” Malhotra said.

He said the role of bank boards, risk officers, the management, and regulators lis critical as all are expected to work together.
He said AI can change the economics of credit delivery fundamentally by using AI models to use cash flows, GST filings, utility, payment bills, digital platforms and extend the frontier of bankable India.The technology can also be used improve customer service, by presenting the right product, flag risks and serve a higher number of customers more efficiently. AI can also improve operational efficiency by reducing cost to income in some case by upto 49%.

“Every bank’s playbook has to be used to own. It has to be shaped by its customer base. I would urge all banks to deliberate on their understanding of this journey of AI production and what is it that they can do to accelerate its production. You will always need to invest in technology, IT infrastructure, scaling, re-scaling. You have to forge sustainable partnerships, because you may not be able to do all of it on your own and you will have to build the right governance structures,” he said adding that to implement these policies will require a deliberate, borderless strategy, backed by sustained investment, and a strong intent, rather than a series of disconnected projects.

Malhotra also touched up the risks associated with AI like lack of information why a loan is rejected, bias and exclusion from a model trained on historical lending data and concentration of a handful of financial models or technology vendors undertaking credit and trading decisions across much of the banking system.

He said banks can just be satisfied by complying with the Digital Personal Data Protection Act. He highlighted cyber and adversarial vulnerability from AI themselves.

“There was a report, I think in July, one of the leading AI firms. They gave the AI the programme to check their systems…Over months all these AI agents were able to collaborate and hack their own systems ” he said cautioning banks against such cases.

“For a bank’s decision, the ultimate responsibility has to lie with the bank, and not with the vendor or with the algorithm,” he said.

He also cautioned banks from depending too much on third-party vendors. “I did mention that you will need to build partnerships with all banks, especially small banks, who may not be able to have their own language, non-language models in AI, you have to depend on outside vendors. And this is perfectly understandable, but then you need to manage risks because governance cannot just stop at our outer walls,” he said.

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Southeast Asia faces interconnected challenges from economic pressure, geopolitical rivalry, and technological disruption. The region’s diversity means these forces impact economies unevenly. Leaders must balance short-term stability with long-term autonomy amidst trade shifts and global competition.

While AI investment grows, uneven adoption and energy constraints risk widening inequality. Concerns about economic downturn, job loss, and inflation are paramount, reflecting growth that doesn’t always benefit everyone. Geopolitical tensions are felt acutely, forcing difficult trade-offs. The AI boom presents opportunities but also exacerbates disparities. These converging risks demand integrated, adaptive, and collaborative responses to build resilience.

• Economic pressure, geopolitical rivalry and technological disruption are affecting the region unevenly, reflecting big differences in economic structure, fiscal space and demographic trends.
• Tariffs, supply chain shifts and competing global partnerships are forcing Southeast Asian economies to balance short-term stability with long-term strategic autonomy.
• While governments and firms are investing in AI infrastructure, uneven adoption, energy constraints and workforce disruption could leave smaller firms and vulnerable workers behind.

Imagine 10 very different houses on the same street – some new, some old, some developing while others are becoming unstable; the same neighbourhood but very different grievances.

That’s very much the narrative for Southeast Asia.

The region spans 10 economies, from Singapore, one of the world’s wealthiest, to Myanmar, one of its poorest, with their gross domestic product per capita differing by around $98,000. Yet, in conversations about trade, investment and risk, “Southeast Asia” is often treated as a single place with a single story.

This shortcut misses much about the region and according to the World Economic Forum’s Executive Opinion Survey, capturing how business leaders perceive the risks around them, the divergence is clear.

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Toyota issued a recall for about 655,000 of its Camry vehicles globally over a display error that may deactivate safety indicators such as turn signals and hazard lights, the automaker announced on Tuesday.

The global recall involves vehicles produced between December 2023 and July 2026 across manufacturing facilities in the U.S., Japan and Thailand.

Among those vehicles, a total of 508,354 model year 2025-2026 Camry Hybrids in the U.S. are affected by the recall, according to the National Highway Traffic Safety Administration (NHTSA).

NEARLY 50,000 CHRYSLER VEHICLES RECALLED OVER SEAT BELT SAFETY DEFECT

The affected vehicles are equipped with a 7-inch display combination meter that may be blank at startup. Only the LE, SE and Nightshade trims have the smaller 7-inch display. The XLE and XSE trims use a larger 12.3-inch driver display, so these models are not affected.

Turn signals, hazard lights and other warning buzzers, such as reminders to fasten the seat belt and remove the key from the ignition, may also be deactivated due to the defect in affected vehicles.

“The 7-inch combination meter may become blank at startup,” the automaker said in a statement. “This can also deactivate the turn signal and hazard lamps and certain warning buzzer sounds (such as the smart key reminder and the driver/passenger seat belt reminder). This can cause the vehicle not to meet certain federal safety standards.”

SOME OLDER FORD VEHICLES POSE ‘UNREASONABLE’ SAFETY RISKS, REGULATORS WARN

“If certain required information is not displayed in the combination meter, if the turn signal/hazard lamps do not function, or if certain warning buzzers do not activate, there can be an increased risk of injury or a crash depending on the specific situation,” the statement added.

The NHTSA warns that these display issues increase the risk of a crash for both drivers who may be unable to see telltale indicators and other road users would not know the driver’s intent to turn or indicate a vehicle hazard.

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Toyota Motor North America said it will notify owners of the affected Camrys, so they can bring their vehicles to a dealer for a software update free of charge.

U.S. owner notification letters are scheduled to be mailed starting on Sept. 21, with all expected to be sent out by early October.

Oil prices extended gains on Wednesday as uncertainty over a possible US-Iran peace deal and fresh attacks on shipping raised fears of further supply disruptions in the Middle East. The rise came despite industry data pointing to an increase in US crude inventories.

Crude oil price on August 12

Brent crude futures were up 72 cents, or 0.81%, at $89.63, while US West Texas Intermediate (WTI) crude gained 71 cents, or 0.85%, to $83.91.
Both benchmarks had settled more than $1 higher on Tuesday, taking prices to their highest closing levels since July 31. That followed a roughly 5% jump on Monday, when hopes of a peace agreement between the US and Iran started to weaken.

The latest concerns were triggered by separate reports from the United States and Yemen’s Iran-aligned Houthis about attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday.

Also read: $48 billion profit! 5 global oil majors cash in on oil surge amid Iran war. Where is money flowing?

Iran’s top security official, Mohsen Rezaei, said the Strait of Hormuz would remain closed unless Washington agreed to Tehran’s conditions for ending the war. These include the release of frozen Iranian assets and an end to other conflicts across the region.
Supply concerns have also increased after Saudi Arabia’s state oil company Saudi Aramco delayed the restart of its 400,000-barrel-per-day Jazan refinery to August 30. The delay came after the Houthis claimed responsibility for two attacks on the facility on Sunday.The UAE’s ADNOC said on Friday that 15 of its vessels had been attacked while passing through the Strait of Hormuz since the conflict began.

The situation around both Hormuz and Bab el-Mandeb remains a key risk for oil markets. Even temporary restrictions, or the threat of further attacks, are raising insurance costs and prompting ships to use longer routes. This is expected to keep energy flows under pressure in the near term.

What are experts saying?

The duration of the disruption will be critical for the outlook on crude prices. JPMorgan estimates that every additional month of disruption could push Brent up by about $7 to $8 a barrel. If the disruption lasts three months, the bank expects average monthly Brent prices to reach around $114 a barrel.

Goldman Sachs has similarly warned that Brent could rise to $120 a barrel if shipping disruptions through the Strait of Hormuz, the world’s most important oil transit route, continue.

Read more: Iran’s Supreme Leader Khamenei fills 6 key military positions

However, Goldman Sachs expects the Middle East tensions to eventually ease in its base case. It sees Brent averaging $80 a barrel in the fourth quarter and $75 a barrel next year. At the same time, it said risks remain tilted to the upside because disruptions through Hormuz and the Red Sea could last longer than expected.

“The direction of our outlook is unchanged; the path and the timeline have shifted. We still expect oil to cool as we move into 2027, for three reasons: supply outside the conflict zone is expanding, with OPEC+ raising production targets, the UAE at record output and non-OPEC barrels responding to price,” said Anindya Banerjee, Head of Commodity Research at Kotak Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)