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India needs to adopt a proactive approach to the safety and security of artificial intelligence (AI) in the financial sector as the technology gains wider acceptance, Chief Economic Adviser (CEA) V. Anantha Nageswaran said on Friday. 

Addressing the ASSOCHAM India International Fintech Festival 2026 here, the CEA said AI has the potential to significantly strengthen the fintech ecosystem by improving credit assessment, identifying financial stress at an early stage and enhancing risk management.

He also cautioned that policymakers and firms may not have the luxury of waiting for risks to materialise before taking corrective action.

"Specifically speaking from the fintech perspective, AI is going to help various firms in the industry analyse creditworthiness far better and flag risks and stress much earlier," Nageswaran said.

However, he warned that recent instances of AI agents acting autonomously have highlighted the importance of focusing on the technology's safety and security, alongside its productivity benefits.

"We do not generally pay attention to risks until they become a reality. I do not think we will have the luxury of time, particularly in the financial sector, to react later. We have to be very focused on the safety and security aspect of AI," according to him.

Nageswaran further noted that businesses and policymakers should ensure that the pursuit of efficiency and productivity gains through AI does not come at the cost of financial stability or existing safeguards.

"With the temptation to take advantage of the potential productivity gains, we should not lose what we already have," he said.

The CEA also cautioned against drawing firm conclusions about the economic benefits of AI at a time when enthusiasm surrounding the technology remains high.

According to him, a more balanced assessment of AI's costs and benefits would be possible only after the current financial market enthusiasm around the technology subsides.