Bangladesh Bank is formulating a comprehensive policy to regulate the use of Artificial Intelligence (AI) in the banking sector, reports UNB.
The primary goal of the policy is to ensure the safe and effective deployment of AI technology for purposes including fraud prevention, risk management, economic forecasting, enhancing internal efficiency and improving customer service.
A special seven-member team from the central bank's Information Technology (IT) Division has started work on the policy.
According to sources, the team is expected to prepare a draft based on international standards within the next two months.
They said Muhammad Zakir Hossain, Executive Director of Bangladesh Bank, is coordinating the entire process.
A key component of the central bank's initiative is the plan to develop its own Large Language Model (LLM) for AI implementation. This crucial step is designed to maximise data security by eliminating the need to send the country's sensitive financial information abroad.
By leveraging AI, the central bank anticipates being able to analyse vast amounts of economic data to provide more accurate forecasts for critical indicators, including inflation, GDP Growth and foreign currency reserves.
Besides, AI is expected to play a vital role in managing credit, market, and liquidity risks, as well as accelerating innovation in the Fintech and digital banking sectors.
This policy initiative comes in the wake of a recent study by the Bangladesh Institute of Bank Management (BIBM), which revealed a significant policy gap.
The study found that nearly 60 percent of local banks currently lack any policy for using AI in cyber security, with only 40 percent having formulated guidelines on the matter.
The new central bank policy is expected to establish a unified, modern, and secure framework for AI usage across the nation's financial sector.
Bd-Pratidin English/ AM
