AI-ENABLED CYBER RISKS IN BANKING:

Paper Number :WP65/2026
Publication Date :July 9, 2026

AI-Enabled Cyber Risks in Banking: Institutional Preparedness, Governance and the Regulatory Response

The rapid emergence of frontier Artificial Intelligence (AI) systems capable of discovering and chaining software vulnerabilities at machine speed has introduced a qualitatively new category of cyber risk for the banking sector. In response, India’s central bank has directed regulated entities to complete a board-approved gap assessment of AI-related cybersecurity risk and to formulate a timebound action plan (RBI, 2026). This paper examines what stands between that regulatory check and institutional readiness in the Indian banking sector, and sets out the policy response required to close the distance.