New Delhi, Oct. 3: India can withstand global financial risks linked to artificial intelligence valuations because of its strong macroeconomic fundamentals and resilient financial system, RBI Governor Sanjay Malhotra said on Saturday.
Speaking at the Kautilya Economic Conclave 2026, Malhotra said the AI investment boom had become a major driver of global financial markets. However, a slowdown in AI investment or earnings could trigger a sharp repricing of financial assets linked to the sector.
He said a correction in elevated AI valuations in advanced economies could also redirect global capital towards India.
“If corrections in AI-related valuations were to happen in advanced countries, it may have a positive impact in terms of capital inflows,” Malhotra said.
The RBI Governor noted that Indian equity markets had already corrected from elevated valuations in recent months. He described the adjustment as orderly.
RBI Governor Flags AI Valuations and Cybersecurity
Malhotra identified stretched AI-related valuations as one of five key risks facing the international financial system. The other concerns include elevated global debt, leverage in the non-bank financial sector, growing private credit exposure and cybersecurity threats.
He said these vulnerabilities did not point to any immediate financial stress. However, he stressed the need for regulators and financial institutions to remain alert.
“It is not that I see any imminent signs of stress, but we need to remain alert to these risks,” he said.
Malhotra said India was facing the global environment from a position of strength. He pointed to sound macroeconomic fundamentals and resilient balance sheets among banks and non-bank financial institutions.
At the same time, he acknowledged that India remains exposed to external shocks through commodity prices, global financial conditions and capital flows.
“Strong macroeconomic fundamentals and the resilience of the financial system provide confidence in our ability to withstand these lingering shocks,” he said.
The Governor identified cybersecurity as the most immediate concern. He said sophisticated AI tools could increase cyber risks and create vulnerabilities that spread across jurisdictions.
He also warned that future financial disruptions may originate outside the banking system, including through geopolitical events, cyberattacks or technological failures that affect financial networks.
Malhotra said regulators should focus on ensuring that the financial system can absorb shocks rather than attempting to eliminate every risk. He said excessive risk removal could also constrain investment and innovation.
The remarks come amid growing global scrutiny of the financial risks associated with the rapid expansion of AI investment and valuations.
Now you can get the latest stories from Indtoday on Telegram every day. Click the link to subscribe. Click to follow Indtoday’s Facebook page, Twitter, and Instagram. For all the latest Hyderabad News updates and Follow us on GoogleNews
