Algorithms must explain decisions, says Murmu

MUMBAI: Reserve Bank of India wants lenders to ensure that algorithms used to make or materially influence credit decisions can explain why a borrower has been rejected, putting accountability and explainability at the centre of its expectations for lending that's driven by technology.RBI deputy governor Shirish Chandra Murmu, speaking at the Global FinTech Fest in Mumbai on Friday, said digital lending should not merely make the process of extending credit faster. Technology and better data should help lenders reach borrowers who have historically remained outside the formal financial system, making credit "better" as well as faster."The vendor with the printed QR code is now part of the formal financial system. The questions she faces next are harder ones. Will she be offered credit on terms she can understand? If an algorithm declines her loan application, will anyone be able to tell her why? If her account is frozen by a fraud detection system, how long before she can trade again? Those questions are the real content of trusted innovation, and how we answer them will matter more than any technology we deploy," said Murmu.He cautioned institutions against being comfortable with their cryptographic dependencies. He said that while quantum computing is not an immediate threat, payment infrastructure has long tech cycles and migration to new standards takes years. "There is also the 'harvest now, decrypt later' risk, under which encrypted information collected today becomes accessible as computing capability advances."Get the latest Business News and Live updates. Download the TOI app.