Nepal Rastra Bank has published a draft guideline for the use of artificial intelligence (AI) in banks and financial institutions (BFIs), aiming to ensure secure, transparent, and well-regulated adoption. The draft applies to commercial banks, development banks, finance companies, microfinance institutions, and payment service providers. It assigns full accountability to senior management and boards for decisions made by AI systems. The guideline categorizes AI risks into five levels, with high-risk systems involving major financial, legal, or operational consequences. BFIs must inform customers when AI is used, ensure AI decisions are explainable, protect customer data under the Privacy Act 2018, and submit annual AI activity reports to regulators.
