Summary: As artificial intelligence reshapes the contours of India’s financial landscape, regulated entities find themselves navigating a delicate balance between harnessing transformative innovation and managing its inherent risks spanning algorithmic bias, model opacity, and systemic concentration. The RBI’s establishment of the FREE-AI committee signals a decisive regulatory commitment to responsible AI governance, anchored in principles of accountability, fairness, and explainability. The paper ultimately calls upon regulated entities to embed these imperatives at the very foundation of their AI frameworks, underpinned by robust data governance and a culture of institutional vigilance.