RBI's FREE-AI framework: what it means for global AI and fintech vendors serving India
If you supply AI/ML models, GenAI tools or AI-enabled services to an Indian bank, NBFC or other RBI-regulated entity, the RBI FREE-AI Committee's August 2025 report sets the direction your client's compliance program is likely to take - a board-approved AI policy, model governance and inventory, red-teaming, and AI incident reporting. It isn't a binding RBI direction yet, but Recommendation 6 proposes RBI formalise it as consolidated AI Guidance, so expect these expectations to flow into your contracts regardless.
Overview
If you supply AI/ML models, GenAI tools or AI-enabled services to an Indian bank, NBFC or other RBI-regulated entity, the RBI FREE-AI Committee's August 2025 report sets the direction your client's compliance program is likely to take - a board-approved AI policy, model governance and inventory, red-teaming, and AI incident reporting. It isn't a binding RBI direction yet, but Recommendation 6 proposes RBI formalise it as consolidated AI Guidance, so expect these expectations to flow into your contracts regardless.
Who Needs to Comply?
Global AI/ML vendors, GenAI platform providers and fintech technology suppliers to RBI-regulated banks, NBFCs and AIFIs.
Key Requirements
Flows to you through vendor contracts
REs are expected to govern third-party AI risk, inventory dependencies and assess AI-specific risk before product approval - your AI tool becomes part of their audit trail.
Not law yet, but the direction is clear
These are Committee recommendations (13 Aug 2025), not a binding RBI Master Direction - but RBI has signalled consolidated AI Guidance may follow.
How we help
AI model documentation, red-teaming evidence and risk assessment formatted for your Indian RE client's FREE-AI-aligned vendor review.
How we help you comply
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Cyber Governance & Audit
AI governanceISO/IEC 42001 (AI Management System) Audit
ISO 42001 AIMS gap analysis, build-out and certification-audit readiness, run by our ISO 42001-qualified auditors.
FAQ
Frequently asked
Is FREE-AI mandatory for us as a vendor?
Not directly - FREE-AI is a Committee recommendation to RBI-regulated entities, not a law binding vendors. But if your client adopts a board-approved AI policy built on it, your AI product will be assessed against it during vendor review.
Has RBI turned this into a binding direction yet?
As of this guide's last update, no - it remains a Committee report. Recommendation 6 proposes RBI issue consolidated AI Guidance; confirm the current status on rbi.org.in before treating any specific recommendation as mandatory.
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