'Double-edged sword': Sitharaman flags AI risks, urges efficiency without fragility
Indian Finance Minister Nirmala Sitharaman warns that AI is a double-edged sword that requires careful regulation to prevent systemic fragility and fraud. She emphasizes the need for a 'soft-touch' regulatory approach that balances innovation with the risks posed by large language models and cyber threats.
Why it matters
It highlights the growing global tension between fostering rapid fintech innovation and implementing necessary safeguards to protect national stability and electoral integrity.
Finance minister Nirmala Sitharaman described artificial intelligence as “a double edged sword”, warning that while it can help detect fraud, it can also be used to perpetrate it. Speaking at the Global Fintech Fest 2026, Sitharaman also added that innovation should expand efficiency without creating new forms of systemic fragility.Cautioning about the risks linked to artificial intelligence, large language models and cyber threats, she highlighted that technology can influence society and even electoral outcomes. Sitharaman said, "The model that I'm referring to is fully capable of influencing opinion on the ground without people even sensing that they are being influenced...I'm therefore glad that just yesterday, September 10, the Reserve Bank of India recognised the Unified Fintech Forum as another self-regulatory organisation for the fintech sector under the SRO-FT framework."Sitharaman said regulation would have to strike a balance between supporting innovation and addressing these risks.
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