Emerging artificial intelligence systems like Claude Mythos present both risks and opportunities to the financial sector, Department of Financial Services (DFS) Secretary M Nagaraju said on Thursday, stressing the need for responsible adoption of the technology along with stronger safeguards for cyber security and data privacy.
“Mythos is a threat and an opportunity for the fintech ecosystem,” he said while speaking at the PICUP Fintech Conference & Awards 2026 in New Delhi, indicating that the Center and regulators are studying the technology and its implications for finance in detail.
He said India’s financial sector is undergoing one of the most profound transformations in its history, with a structural shift in the way services are provided, delivered and experienced by citizens. The next phase of growth will require balancing innovation with resilience and inclusion, he says.
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He said despite global headwinds such as geopolitical conflicts, supply chain realignment, elevated interest rates and uncertainty, India continues to be a bright spot in the global economy.
The country is moving towards its goal of becoming a $5 trillion economy, supported by strong macroeconomic fundamentals, infrastructure growth, an expanding manufacturing base and diversified supply chains, he added.
Citing economic indicators, Nagaraju said real gross domestic product (GDP) growth for 2025-26 is estimated at 7.6%, up from 7.1% in 2024-25. Private final consumption expenditure rose by 7% to 61.5% of GDP in 2025-26, the highest since 2012, while gross fixed capital formation rose by 7.8%, stabilizing at 30% of GDP.
He also emphasized the improvement in the health of the banking sector. The gross non-performing asset (NPA) ratio of scheduled commercial banks stood at 2.2% in September 2025, while the net non-performing asset ratio was at a record low of 0.5%. The growth of outstanding bank loans increased by 14.5% year-on-year as of December 31, 2025, compared to 11.2% a year ago.
On financial inclusion, he said India has become a global benchmark in the last decade. Nearly 580 million accounts have been opened under the Pradhan Mantri Jan Dhan Yojana, with more than half held by women. Deposits exceed ₹3 trillion and more than 400 million RuPay cards have been issued.
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He added that Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana have together enrolled over 840 million beneficiaries while Pradhan Mantri MUDRA Yojana has sanctioned over 570 million worth of loans. ₹39 trillion. The Stand-Up India program has paid off ₹41,000 million crowns.
Nagaraju said India’s digital public infrastructure – led by Aadhaar, Unified Payments Interface (UPI) and the Account Aggregator framework – has become a fundamental driver of growth and inclusion. UPI processed over 22 billion transactions in March, the total value of which exceeded ₹29 trillion. Moreover, it accounted for 81% of retail digital payment transactions in 2024-25.
On AI, he said AI-driven underwriting can assess creditworthiness using alternative data such as digital transaction history, Goods and Services Tax (GST) records, telecom data and information from the Account Aggregator. “AI has the potential to make financial inclusion not only socially desirable, but commercially sustainable,” he said.
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However, he noted that cyber security threats, privacy concerns, trust deficits, market volatility and geopolitical uncertainties must be actively managed. “The next phase will test our ability to responsibly integrate advanced technologies, secure systems against evolving threats, protect citizen data and expand access while maintaining stability,” he said.
