Finance Minister Nirmala Sitharaman has urged the Securities and Exchange Board of India (Sebi) and all regulated market entities to maintain exceptional vigilance, particularly concerning the escalating threats from Artificial Intelligence (AI) in cybersecurity. Speaking on Saturday at Sebi's 38th foundation day, Sitharaman highlighted the rapid evolution of AI-led tools, which are making cyber attacks faster, more adaptable, and scalable, with risks ranging from automated vulnerability discovery to widespread market disruption.
AI & Cybersecurity Risks to Markets
Sitharaman warned of the severe consequences of a successful cyber attack on critical financial infrastructure. “A single successful cyber attack on a major exchange or a depository or a clearing corporation or large broker could disrupt markets at national scale, erase wealth and shape public confidence in ways that take years to reveal,” she stated. This concern extends beyond Sebi to all regulated entities, emphasizing that defensive tools must evolve even faster than offensive ones.
The minister's comments come amidst global discussions around advanced AI models like Anthropic's Claude Mythos, which has significant cybersecurity capabilities. She recently convened a high-level meeting with bank heads to address potential risks associated with such technologies.
Combating Deepfakes and Fraud
A significant area of concern for Sitharaman is the “explosion” of fake investment videos and apps on social media, many leveraging deepfake AI to impersonate public figures. She commended Sebi for implementing a system allowing investors to verify payment details of registered intermediaries, urging for the expansion of such interventions with “urgency and visibility.”
“I urge SEBI to invest very substantially in public awareness through campaigns on every major platform in regional languages and through rapid response takedown mechanisms for fraudulent content impersonating public officials,” stressed Sitharaman.
Strengthening Market Foundations
Beyond cybersecurity, Sitharaman also advocated for a deeper bond market, specifically emphasizing the need to promote municipal bonds. She noted that urban infrastructure, crucial for India's growth, cannot rely solely on budgetary resources for sustainable financing.
Additionally, the Finance Minister called for the simplification of the Know Your Customer (KYC) process, pushing for a seamless, secure, and portable KYC experience across the entire financial sector. The existing cyber security and cyber resilience framework, effective since April 2025, was acknowledged as a solid foundation for further enhancements.