Artificial intelligence has moved from the edges of finance to its center. It prices loans, screens transactions, powers trading systems, and helps regulators spot danger before it spreads. That same power introduces risks the financial system has not faced before, from AI-driven cyberattacks to markets that rise and fall on expectations of a technology still proving itself. Central banks in India and abroad now treat these questions as central to financial stability. The sections below examine how AI is changing financial risk, what regulators are doing about it, and why these shifts matter for anyone studying finance, including prospective students researching BBA in Finance course details. What does financial stability mean, and why does AI affect it? Financial stability is the ability of a financial system to keep working through stress, so that banks continue to lend, markets continue to trade, and payments continue to clear even when a shock arrives. It matters because instability spreads quickly. A failure in one institution or market can pull down others and reach ordinary savers and borrowers. Artificial intelligence affects this balance because it now sits inside the core functions of finance. It approves loans, watches transactions for fraud, drives trading strategies, and helps supervisors read risk. The gains in speed and accuracy are real, and so are the new weaknesses, because the same tools can be turned against the system, and markets built on expectations of AI can move sharply when those expectations change. How is AI changing the risks banks and …










