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The Reserve Bank of India (RBI) published draft guidance redefining the scope of third-party risk for banks operating in India. Under the proposed framework, banks would be held accountable for all AI models used in their operations, including those licensed from third-party vendors. Rather than relying on vendor certifications, banks would need to independently validate third-party models. The guidance also requires that contracts with technology vendors provide technical documentation, audit rights, and exit/continuity terms. This has significant implications for fintech partnerships and BaaS-style arrangements in the Indian market, where banks increasingly rely on vendor-supplied AI for lending, risk, and compliance functions.

Verified from source: RBI's draft Guidance on Regulatory Principles for Model Risk Management, 2026 makes banks accountable for all AI models used, including vendor-licensed systems. Banks must validate third-party models independently, as vendors cannot certify compliance, and existing contracts often lack necessary documentation and audit rights.