Policy must balance innovation with accountability, resilience: RBI Deputy Governor Jain

New Delhi: Policy should provide room for innovation to grow while ensuring that accountability and resilience grow alongside it, RBI Deputy Governor Rohit Jain said on Wednesday.

The objective of policy, therefore, is to create the conditions in which useful innovation can develop responsibly, he said here at the Global Fintech Fest 2026.

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"This requires clear guardrails where the risks are understood, room for experimentation where they are still emerging, and the ability to adapt the framework as technology and its uses evolve. Good policy should give innovation room to grow, while ensuring that accountability and resilience grow with it," he said.

He also said that policy has to remain informed by what is happening on the ground.

In a rapidly changing environment, regulators cannot understand emerging technologies through returns and supervisory observations alone, he said, adding that regular engagement with financial institutions, fintechs and technology providers helps identify new use cases and emerging concerns early, while also giving industry greater clarity about regulatory expectations.

Emerging technologies are often understood better through carefully controlled use than through speculation alone, he said.

Regulatory sandboxes can play an important role here by allowing genuinely new applications to be tested within defined boundaries before they are deployed more widely, Jain said.

Speaking about regulations, Jain said, "Regulate too early, and we risk writing detailed rules for a technology we do not yet fully understand, or for an architecture that may change before the rules take effect."

Regulate too late, and the technology may already be deeply embedded before its risks are fully understood and addressed, he said, adding that there is no perfect point between these two outcomes.

Amid rapid advances in algorithms, tokens, platforms, cloud infrastructure and quantum computing, policymakers should not lose sight of the people at the other end of technology, he said.

"There is always someone at the other end of the technology — there is a saver entrusting an institution with hard-earned money, a borrower seeking an opportunity, a merchant awaiting a payment, or a family depending on the financial system when it matters most," he said.

Jain said this is ultimately where the responsibility of the financial system lies.

Most customers may never know which model made a recommendation, which cloud hosted it or which technology enabled a transaction, but they will experience the outcome, he said.

"Their confidence in technology will ultimately depend not on how sophisticated it is, but on whether it works for them fairly, reliably, and safely," the Deputy Governor said.

He emphasised that purpose, prudence and policy need to move together, cautioning that purpose without prudence could lead to recklessness, while prudence without purpose could result in stagnation.

"Policy is what binds the two together at scale," he said.

The objective should not merely be to make finance faster or smarter, but to ensure that technological progress makes finance more useful, resilient and responsive to those it serves, Jain said.

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Every technological wave has expanded the range of what human beings can do, and the opportunity now is to ensure that emerging technologies expand not just what finance can do, but also what it can do better for those it serves, he added.

"If we can achieve that, emerging technology will have served not merely innovation, but the larger purpose of finance itself," he said.

Jain further said that purpose, prudence and policy are the three imperatives that must guide the adoption of emerging technologies such as artificial intelligence, tokenisation, distributed ledger technology and quantum computing.

Finance and technology must act as catalysts that multiply and transform how value is created, distributed and scaled.

He outlined five underlying shifts, including cost reduction that expands financial inclusion, productivity gains, AI improving human judgment, and data emerging as a key factor of production.

On AI and human judgment, he said, human creativity, empathy, ethics and purpose, combined with the speed and precision of AI, can unlock tremendous possibilities.

"A solution, however well-intentioned or technologically impressive, has little value if it does not address the problem that actually needs solving," he said.

On risks accompanying scale, he flagged speed, concentration and opacity as key regulatory concerns, stressing that institutions must detect problems early and intervene before small mistakes escalate.

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