fbpx
Model-based algorithm lending |

Model-based algorithm lending

In News

∙ The Reserve Bank of India is closely examining the risks that can emerge from model-based algorithm lending, which led to the surge in unsecured loans,

About Model-based algorithm lending

∙ Algorithmic models are powered by artificial intelligence and machine learning

∙ It has not only reduced operational costs but has also expanded the outreach of financial services providers.

∙ It often operates as ‘black boxes’, making it challenging to decipher the rationale behind their decisions.

ο Such model-based lending could lead to a potential crisis.

∙ Therefore Management, boards of directors, and audit committees should ensure robustness in algorithms and gauge the possible risks these models could create.

∙ The Reserve Bank’s supervisory systems have been recalibrated to attune them to the dynamics of the financial sector in a forward-looking approach so as to smell possible distress early.

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

You cannot copy content of this page

0
Would love your thoughts, please comment.x
()
x
Scroll to Top
×