UPSC Prelims Practice Questions — The dual impact of Artificial Intelligence on the finance industry

Q1. The 'Framework for Responsible and Ethical Enablement of Artificial Intelligence' (FREE-AI) Committee, whose report was released by the Reserve Bank of India in August 2025, was chaired by:

  • A. Dr. Pushpak Bhattacharyya
  • B. Dr. Nandan Nilekani
  • C. Dr. K. V. Kamath
  • D. Dr. Krishnamurthy Subramanian

Q2. The RBI's FREE-AI Committee Report (August 2025) on AI in the financial sector contains how many recommendations?

  • A. 7
  • B. 21
  • C. 26
  • D. 32

Q3. Consider the following items listed as the six strategic pillars of the RBI's FREE-AI framework (2025): 1. Infrastructure 2. Policy 3. Risk Mitigation 4. Assurance Which of the above is/are NOT correctly identified as a pillar of the FREE-AI framework?

  1. Infrastructure
  2. Policy
  3. Risk Mitigation
  4. Assurance
  • A. 1 and 3
  • B. 3 only
  • C. 2 and 4
  • D. 3 and 4

Q4. The 'India AI Governance Guidelines: Enabling Safe and Trusted AI Innovation', released in November 2025, were issued by which of the following?

  • A. NITI Aayog
  • B. Ministry of Finance
  • C. Ministry of Electronics and Information Technology
  • D. Department for Promotion of Industry and Internal Trade

Q5. In the context of the seven 'sutras' of India's AI Governance Guidelines (2025), the principle of 'Innovation over Restraint' specifically means:

  • A. All precautionary restraints on AI deployment must be removed to maximise innovation.
  • B. Responsible innovation should take precedence over precautionary restraint, provided appropriate safeguards are in place.
  • C. Private-sector AI innovation must be allowed only after public-sector restraints are eased.
  • D. Innovation in AI may override existing data protection laws wherever they restrain deployment.