New Delhi, Sept. 11 -- The Reserve Bank of India (RBI) believes that as finance becomes more automated, human accountability must become stronger, not weaker, deputy governor Shirish Chandra Murmu said on Friday.

Murmu said the answer cannot be that the algorithm is accountable. Responsibility rests with the regulated institution, as well as its board and senior management, who must understand the models they deploy, their limitations and the consequences of their use.

Digital lending can reduce the cost of originating, assessing and servicing small loans, while partnerships can help regulated lenders reach customers previously uneconomical to serve, he said. But technology should widen the frontier of formal credit, not merely make exi...