The Reserve Bank had issued the draft “Regulatory Principles for Management of Model Risks in Credit” on August 05, 2024, with a view to strengthen governance and risk management practices relating to use of models in credit, followed by report of the Committee on Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) on August 13, 2025. Considering model usage has expanded significantly and regulated entities are increasingly using models, including those employing Artificial Intelligence / Machine Learning (AI / ML), across various business and decision-making processes; weaknesses in their governance, oversight, risk management and controls may expose the regulated entities to financial, operational, compliance, and reputational risks.

Accordingly, to ensure robust governance, risk management and oversight over the use of models, including third-party models and models employing AI / ML, the Reserve Bank has today released the draft Guidance on Regulatory Principles for Model Risk Management, for public comments.

Additional comments or any attachments may also be submitted by email at dor.mrmfeedback@rbi.org.in.

Last date for submission of comments is July 24, 2026.

Draft Directions