Source: The Register: Biting the hand that feeds
India's Reserve Bank is pursuing a paradoxical strategy: using AI to expand lending to underserved populations while maintaining plausible deniability about algorithmic risk. The regulator frames this as financial inclusion, but the mechanism is liability displacement. If an AI approves a loan that defaults, the institution can blame the model rather than its own underwriting standards. Regulators favor algorithmic decision-making because it creates institutional cover for lending practices they wouldn't defend if a human officer signed off on them, even as they invoke "responsible AI" rhetoric.