Artificial Intelligence (AI) now plays a central role in India’s banking sector. Banks depend on AI systems for scoring credit risk, detecting fraud, monitoring transactions, automating customer interactions and supporting compliance processes. These systems promise efficiency and scale, but they also rely on continuous processing of personal and financial data. This increases concerns about fairness, transparency, accuracy and privacy. The Digital Personal Data Protection Act 2023 (DPDP) and the Digital Personal Data Protection Rules notified in 2025 have introduced a detailed and structured framework to govern the processing of such data. These Rules include strict standards for consent, retention, deletion, breach reporting, cross-border transfers and automated decision making. They also create new classifications, Significant Data Fiduciaries, under which most banks are likely to fall. This paper examines how these updated Rules affect AI enabled banking in India. It studies how the Rules shape responsibilities related to fairness, accountability and transparency in automated decision making. It also compares India’s approach with global models such as the GDPR, China’s PIPL and the United States’ sector specific system. While the new Rules mark a major step forward for data governance, the paper argues that India still needs clearer standards on algorithmic fairness, explainability, vendor management and audit requirements. The aim is to support a regulatory environment that encourages innovation while protecting financial data and strengthening trust in AI driven banking.