The use of artificial intelligence (AI) is gaining traction across sectors, and State Bank of India chairman C. S. Setty sees it as a “defining force” in what can be done in financial markets.
AI has the potential to significantly enhance risk management, improve operational efficiency, and enable real-time market surveillance, said Setty.
“By analysing vast data sets of historical transactions, counterparty behaviour, and market conditions, AI can enable dynamic management, real-time risk assessment, and more accurate prediction of counterparty exposures,” he pointed out.
AI and machine learning can also automate repetitive processes such as clearing, settlement, and reconciliation, reducing operational overheads while improving speed and accuracy, he added.
“In many ways, this represents a shift from being a post-trade processor to becoming a pre-emptive risk sentinel—one that not only manages risk but anticipates it,” said Setty.
Setty was speaking at an event marking 25 years of Clearing Corporation of India (CCIL).
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He envisions deeper integration with global market infrastructures as Indian markets gain greater prominence in the international financial landscape.
He sees new asset classes emerging and cross-border flows intensifying. But, importantly, he feels “risks will develop in ways that are less visible, but potentially more systemic.”
Setty also said that new “frontiers” such as digital assets, tokenised securities, and enhanced cross-border settlement mechanisms would require “innovation and prudence.”
Amid the evolving landscape, he sees cyber resilience, technological robustness, and regulatory alignment as critical pillars.
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Recently, RBI Deputy Governor Swaminathan J. termed powerful technologies like AI a “double-edged sword.”
“If AI is adopted without adequate safeguards, it can amplify existing weaknesses and create entirely new forms of harm. Therefore, the conversation about AI in finance must be balanced. We should neither be taken in by technological hype nor retreat into being defensive,” he said.
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