The concept of Banking in India started in 1683 when The Madras Bank was found. Since its Inception, The concept of Banking in the country has seen copious changes. The Beauteous aspect is that it has undergone multiple changes and additions but has thrived in the country as it stands as a stalwart of the country's economic health. Banking law postulates the laws and regulations governing the legal relationships between banks inter se, between the banks and their customers and other interested persons. [1] In the Indian diaspora, The Reserve Bank of India regulates the banks in accordance with the Banking Regulation Act, 1949. There has been ample amount of digitalization of the Banking system in the country through online platforms palliating the customers and bank's interface.

Artificial Intelligence can potentially enter the Indian markets through powering internal operations and customer-facing application and improving fraud detection etc and has somewhat reaped substantial benefits however there are possible pros and cons attached to any subject-matter. In this manuscript, I would be centring the precedence of AI when it is intertwined with the plinth of Banking in the country and the pitfalls associated with it. The utmost goal of digitalization is cost cutting and time saving aspects that constitute a smooth functioning of Banking in the country.

It is predicted that AI would be helping the banking industry with the projections of reaching 64.03 billion dollars by 2030. Certain contentions also deem Artificial Intelligence to somewhat curb the human's intervention in the systematic regulation of the country's facets however, If it obliges in favour of improving the economic health of the country it might as well be taken into presupposition. The cautious step that needs to be urgently taken by relevant authorities of the country shall also be discussed in the manuscript.

Introduction
Banking is a system that protects and manages money in the country. The very plinth or economic health of the country is worked upon/ based on the regulatory system of finances in the country. Banking majorly deals with individuals or institutions be provided with loans, deposition and transactions of money. The history of Digital Banking in India traces back to 1960s however, the modern digital banking began to take shape in early 2000s. Earlier, Banking used to be a very traditional notion that included the customers befalling to the stipulated bank and accessing services such as transacting money to other's account, debiting and crediting etc. If we trace back to the colonial advent or short after, The system of Banking revolved around moneylending and sometimes was also inclusive of the illiterate persons being deceived of their money.

The colonizers too, took the advantage of setting up financial institutions that charged hefty interests from people who were interested to take up loans in stances of dire circumstances. In rural areas, The money lenders used to charge hefty amounts in the name of interests leaving the borrower with no recourse than to adhere to the erratic and despotic norms of the moneylender sometimes leading to unruly and whimsical consequences. However, The systematic forthcoming of Banking regulations and bodies have increased the inclusivity of the transactions as well as the legality supporting it.

With the advent of Internet and Mobile Banking in the country, The aspect of Banking has gained its foothold in the country as a necessitated facet however, Artificial Intelligence too has seen significant growth with the advent of time and It can be further used to acknowledge the geographical differences of variable regions of the country so as to cater to the needs of the different population as per their requisite exigencies in terms of Banking.

The utilization of technology may as well be done in Banking so as to understand, segment and profile the customers so as to cater to them better, target, acquire and retain the customers so as to keep the sanctity of the pre-existing customers, trace the spending pattern of the customers, maintain and grow a profitable customer base, perform the regulatory compliance management, risk management, security and financial crime management and become more operationally efficient etc.

AI intertwined with Banking is a very beauteous and fruitful admixture. Customer behaviour is largely affected by the geographical regions they belong to and this can be posed to be of a beneficial stance for the banks so as to quantify losses and profits and predict the future probabilities in advance specifically in India that transcends a cultural and ethnical intermix. The ascendancy of Artificial Intelligence needs no introduction as it is already prevalent and known to people since a considerable time period. AI is deemed to be of such a facet if used positively and for productive measures may as well garner profitable instances and vice-versa.

There has been ample number of banks that have been opened in the country and the number keeps on growing instantaneously. The State Bank of India in the context of Indian Banking has experimented the implication of AI in banking and has seen considerable success. Banks use AI to help the customers plan their investments properly and it also helps the industry in multiple finance related roles like accounts, credit decisions, detecting frauds, investing, trading, advisory services, risk management etc.

Another useful facet of AI is the ability to retrieve data and data significantly emerges to be the most quintessential facet in terms of banking so as to trace the transactional pattern so as to serve customers better. Human errors which emerge to be a normative factor can be corrected to a certain limit if intermixed with the assistance of Artificial Intelligence in order to garner prosperous conclusions. The very advent of commercialization in the country has been propagated through Banking in the country and has also created numerous job opportunities in the country.

India is a country that worships financial prosperity and considers it as a godly intervention hence it advocates for the eradication of poverty in the country. There have been numerous schemes that have been in favour of the lesser privileged classes such as them availing banking facilities such as loan with lesser interests etc. AI may as well in the long run curate various intrinsic apps that help businesses trace risk mitigation and optimizing day to day business operations as well.

The virtual assistant may as well predict and personalize customer requirement, provide interface in various languages as per convenience, analyse the customer's credit-worthiness, ensure contracts, agreements, documents and compliances saving human time and energy, detecting potential money laundering, providing redressal mechanisms and acting as an assistance to all big or small problems that the customer might as well face. AI can also be used in the systematic banking operations for the Bank employees so as for them to minimize human utility and make use of the remaining time.

Banks need to regularly add technologies and gain insights so as for the timely betterment and utilization of AI for profit maximization. The utmost goal of Banking i.e. Performance, Profitability, Compliance, Competitiveness and Risk Reduction might as well be achieved by the intervention of Artificial Intelligence.[2] Banks focus on the progress aspects precisely and maintain the stance of profit with every small as well as grand decisions that it makes internally and externally.

While acknowledging the significance of AI in the capital markets and taking into consideration the advantages of AI in the Banking systems, One cannot ignore the pitfalls that have accrued and those that might as well accrue such as the ethical and legal concerns including privacy, security, lack of transparency and algorithm bias etc. The biggest disadvantage associated with AI is the lack of a particular entity that may as well be held accountable for the legal concerns in case of AI being used for malicious purposes since there is no backing to the originator of AI or what may be addressed as the face value. The recourse that is likely taken in the corporate jurisprudence is the piercing of the corporate veil can be persuasively taken regard of in the scenario of Banking and criminality if it occurs at any particular juncture.

There are cybersecurity laws that govern the intricacies of violation of the same through legal recourses however, AI is an entity of which the parent body is very strenuous to be determined. While we take into account the originators and creators of AI programs, We must also take into account that AI forms to be a part of the civic space that has been created by a set of universally accepted rules in the world and since it emerges to be relatively new to the world, Many aspects are yet not decided for the proper implementation and onus of its actions.

Banking involves the sensitive facet of monetary contrivances being involved and may as well twist and turn the plinth of economy of a country which is a very stringent subject-matter. The pivotal concern for using AI in Banking initially should revolve around adherence to protocols and predicting unintentional circumstances that might as well accrue. Before the full-operational structure of Banking aligns to the extent of Artificial Intelligence, It is integral to take into consideration the potential risks involved as well.

The basic tenet of AI is to replace human labour and to fulfil India's developing needs financially. India may as well take into consideration the persuasive accounts of AI and its integrity and progress in other countries as well so as to decipher future prospects while drawing conclusions. However, One pitfall may as well be the usage of Artificial Intelligence constituting to guide the different institutions in a similar fashion which may as well lead to uniformity hence there accrues, a dire need for the economic institutions to create and decipher tailored AI programs which transcribe the value the particular institution stands for.

The very cornerstone of human existence is the fear of being replaced by a certain technology which may later water down the entire human intervention in the system which remains to be a legitimate fear. One such stance which comprehends human sentiments is the understanding that humans are never to be replaced by any technology since they carry the rationality and analogy to face various circumstances and problems. Some banks are still in the process of integrating AI however some have integrated it fully into their respective systems. When talking about algorithms and the purpose they might as well serve positively, We must not ignore the stances of the algorithm that might be used by potential disruptors so as for them to take in the conceptualisation of AI for their ill-wills. [3]

Conclusively taking into considerations the ascendancy and perquisites, It can be deciphered that AI particularly in the sense of the Banking prospects can be deemed to be a double-edged sword which may as well reap benefits but might have the possibility to reach the tenets of immorality if purposefully used to wrongful and malicious purposes. As soon as the prospects of AI came to the markets, The Banking sector was the quickest to take into account its presence and acknowledge it to maximise the benefits out of it. The human greed postulates for profit orientation and takes into account any possible measure that satiates or propagates the industrial needs.

Since its inception, There have been multiple reports suggesting the numbers that support productivity through Artificial Intelligence. The Human mind can be useful for what needs human intervention and the rest can be handled by AI in the long run. It is pretty evident that the banking sector in the country is magnanimous and requires a large machinery to run and continue in order for them in course of shelling out profits, This chain of economic growth can be continued by the help of AI technology and can lead to a certain extent of relief for the human race leaving them a room to relax and minimize work overload.

Nowadays, People have garnered a significant level of trust that they attach to technology that does not postulates for human error like mistakes. As we know that change is a requisite for the nature, It is integral that we as society dwell into the intricacies of the positive changes that AI brings to the Banking machinery and reap the benefits accruing out of it for greater good as well as buckle up for the repercussions that might as well occur.

Conclusion
It can be iterated that there is an extent of hesitance while we completely accept the advent of AI for the traditional banking system that has slowly gained power over technology however, the banking institutions as well as the legal institutions for the time being might as well experiment and reach a conclusive resolution in this matter. The legality should get advanced so as for the customers to be ready to face the hurdles that might as well accrue as well as to maintain a deterrent effect for the violators of the systemised setup.

Keeping aside the benefits accruing out of the technology, Another pitfall that arises with the time is the rapid movement of technology. The people acquainted with the know-hows of AI nearly everyday create varying technologies both to facilitate the banking system as well as to disrupt the systems. This very facet should be taken care of by the legal guardians of the country by them pacifying the banking institutions and customers timely by introducing legal recourses that cater to the new disruptions that may as well accrue on a very fast basis.

The very stance of AI leaves a probability of uncertainty and the citizens of the country have multiple contentions as to the questionability of AI taking over jobs of the humans. It is very natural for the humans to fear replacement since the banking sector postulates and provides employment for a large population, Hence, It shall also be predicted as to what could be the recourse and methodology for the banking employees in case of AI replacing their work.

There is also a dire need for banks to reinstate and place stringent security systems that is hard to be decoded by the disruptors. In the Indian scenario, Reserve Bank of India needs to emphasize its stance and pave a way for other banking institutions regarding how to go about the particular intervention.

AI can be deemed to be a life changing technology for the economic institutions of the country and may revolutionize and regard the stance of India in the same but the repercussions such as possible frauds etc have to be also recognized as future prospects. If all the factors are conclusively taken into account, then AI in banking sector can reap significant benefits in the long run. [4]

End Notes:

1. LexisNexisUK: https://www.lexisnexis.co.uk/legal/glossary/banking-law#:~:text=Banking%20law%20may%20be%20defined,to%20banks%20and%20banking%20law%20(last%20visited%20Oct%206,%202024)
2. Kommana V Ganesh Kumar, Role of Artificial Intelligence & Analytics in Banking TJIIBF (1-5) 2021
3. Krutika Sawant, A Study of AI in Banking System 16 KRIS (36-39) 2023: https://www.universalai.in/wp-content/uploads/2020/03/A-STUDY-OF-AI-IN-BANKING-SYSTEM-KRI160616.pdf
4. Suriya Sv, AI in Banking: A double-edged sword LinkedIn (Oct 08, 2024) 18:27: https://www.linkedin.com/pulse/ai-banking-double-edged-sword-suriya-sv-t3t4c/

Written By: Devika Raj, BA.LL.B (4th Yeay) - Symbiosis Law School, Nagpur
Email: devikaraj.slsnagpur.edu.in