SB 452
Consumer credit and financial institutions.
Creates new compliance requirements or restricts common AI uses. Action needed.
TL;DR
Indiana just passed SB 452 to regulate how banks and lenders use AI in credit decisions. The law requires financial institutions to explain AI-driven loan denials and conduct regular fairness audits of their automated credit scoring systems.
How This Might Impact Your Business
Banks, credit unions, and online lenders using AI for loan decisions must provide detailed explanations when AI systems deny credit applications
Financial institutions with over $10 billion in assets must conduct annual third-party audits of their AI credit scoring models for bias
Mortgage lenders using automated underwriting systems must maintain human review processes for borderline cases
Consumer finance companies have 18 months to implement compliant AI disclosure procedures
Violations carry penalties up to $10,000 per incident plus potential class action liability
Small community banks under $1 billion in assets are exempt from audit requirements but must still provide AI decision explanations
What Should You Do
Schedule a review of your current AI credit decisioning tools with your compliance team by month-end
Contact your AI vendors to confirm they can provide explainable decision outputs required by the law
Budget for annual third-party AI bias audits if your institution has over $10 billion in assets
Update customer communication templates to include AI decision explanations for credit denials
Create a human review process for AI-flagged borderline credit applications
Who It Affects
Status Timeline
introduced
Signed by the Governor
May 4, 2023
introduced
Signed by the Governor
May 4, 2023
AI-generated analysis for informational purposes only. Not legal advice. Always consult a qualified attorney for legal guidance.
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