GFF 2026: AI adoption is no longer a choice; responsible adoption is, says FM Sitharaman

Finance Minister Nirmala Sitharaman on Friday said institutions can no longer afford to frame artificial intelligence adoption as a choice between using the technology and avoiding it, arguing that the focus instead needs to be on deploying AI responsibly and managing the risks that come with it.

“The relevant choice is therefore not between adopting AI and avoiding AI. The real choice is between responsible adoption, well-managed adoption,” Sitharaman said in her valedictory address at the Global Fintech Fest 2026 in Mumbai.

She said institutions that continue to rely entirely on legacy systems risk becoming less capable, losing out to competitors or even fading out as AI reshapes businesses.


“Failing to adopt AI also carries risks,” she said.

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At the same time, Sitharaman stressed that faster AI adoption cannot come at the expense of safety and accountability. As AI moves from providing recommendations to taking direct actions, she said, the potential consequences of errors, fraud and misuse also become more significant.

“AI may assist judgment, but responsibility must remain human and institutional,” she said.

The finance minister said the more serious the consequences of an AI-assisted decision, the stronger the need for human review, explanation and an avenue for appeal.

She also called on regulators, boards and senior management to take greater responsibility for how AI is deployed, rather than leaving it entirely to technology teams.

“They must know where AI is being used, what decisions it influences, what data it relies upon, and what harm could arise if it fails,” Sitharaman said.

Higher-risk AI applications, she added, should face greater scrutiny both before deployment and throughout their lifecycle.

Sitharaman also flagged the need for coordination among financial regulators, competition authorities, data protection bodies and cybersecurity agencies as AI increasingly cuts across traditional sectoral boundaries.

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“No activity should escape appropriate oversight merely because it sits at the boundary between sectors, or is delivered through a technology platform rather than a conventional financial institution,” she said.

Her comments come as financial institutions and fintech companies increasingly deploy AI and agentic AI for functions ranging from fraud detection and underwriting to customer service and operations.

Earlier in her address, Sitharaman described AI as a “double-edged sword”, saying it could help identify fraud faster while also enabling attackers to automate larger and more sophisticated cyberattacks.

She also warned that the speed of agentic AI could amplify systemic risks, as the technology moves beyond recommendations to taking actions directly.

“Agentic AI moves beyond giving recommendations to taking direct actions, compressing multi-day processes into seconds,” she said. But when decisions and transactions become instantaneous, software errors, fraud and market shocks can spread at the same pace, she added.