By K Raveendran
A question to ChatGPT whether a Silicon Valley Bank-type bank failure could happen in India produced a very reassuring answer. While noting that any bank, including SVB type bank, can fail due to various reasons such as mismanagement, fraud, economic turmoil, etc, ChatGPT believes the Reserve Bank of India (RBI) will ensure that such failures are prevented in India. For, the RBI has strict guidelines in place to ensure the financial stability of the banks operating in India. In the past, there have been instances of banks failing in India, but the RBI has taken swift action to minimize the impact on depositors and prevent systemic risks to the banking sector, the AI-powered chat bot points out.
Of course, the pioneering innovation, which is expected to revolutionise how people interact with technology and their own activities, both in terms of its positive as well negative implications, starts with a disclaimer that it does not have access to real time data or the latest events. But interestingly, the ChatGPT answer is very close to what Moody's has said about the impact of two US banks on the Indian banking sector.
According to Moody's, Indian banks are unlikely to realise such losses because their funding and liquidity are strong enough to allow them to hold onto their HTM securities.”Indian banks have faced strenuous solvency challenges in the past decade, but their funding and liquidity have held up strongly and have been a key factor supporting their overall credit strength. Indian banks' average liquidity coverage ratio (LCR) stood at a healthy 133 per cent at the end of March 2022, which is understated because it does not include the bulk of their cash reserves at the central bank, as well as parts of their holdings of government securities,” Moody' says.
Not just the Indian banks, but most banks in Asia Pacific are not exposed to the failed US banks, and only a handful of institutions have immaterial exposures, the investment bank adds. Another major difference between US banks such as SVB or Signature is that depositors with the US banks are mostly corporates while the deposits with Indian banks mostly comprise savings from the people.
IT minister Chandrasekhar has assured Indian start-ups which had been banking with the failed Silicon Valley Bank that the government is exploring the possibility of extending credit lines to those units in view of the crisis. The government is also trying to facilitate transfer of the US dollar deposits of these start-ups to the Indian banks.
It is obvious that the chat bot's response has drawn heavily form inputs collected from various sources, including the Moody's. Hypothetically, it is also possible to ask who followed whom, especially when rating agencies have increasingly faced criticism that their views are often mirrored. But the direction is clear: AI-powered chat bots are here to stay for the long haul.
Former foreign secretary Vikas Swarup recently asked the AI bot to come up with a meditation plan for the ongoing Russia-Ukraine war. ChatGPT responded with a possible 8-point solution which included steps like decentralisation of power in the Russian-speaking region and international monitoring of the implementation of agreements reached during negotiations.
In a Twitter post, Swarup said how the AI bot acknowledged that finding a solution acceptable to both parties is a challenging task, but it added that it can suggest a possible mediation solution. It said negotiations between the leaders of the two nations should aim to find common ground and establish a framework for future cooperation. It also called for economic assistance from global financial institutions like the International Monetary Fund (IMF) and the World Bank to help stabilise Ukraine's economy.
The solution further called upon Russia to recognise the sovereignty and territorial integrity of Ukraine and suggested that Russia should work with its neighbour to protect the cultural rights of Russian speakers in Ukraine, such as allowing the use of the Russian language in education and public life. The chatbot also called for the withdrawal of military forces from the conflict zone and the establishment of a demilitarized zone along the border.
Congress MP Shashi Tharoor was quite pleased with Swarup's experiment, but noted that leaders involved in conflicts are irrational in ways beyond the comprehension of artificial intelligence. This is, in fact, the nature of challenge and opportunity that chat bots face as they become increasingly mainstream. IPA Service
