India Can Withstand Global AI Risks on Strong Fundamentals: RBI Governor
Reserve Bank of India (RBI) Governor Sanjay Malhotra has said India is well placed to withstand financial risks arising from the global artificial intelligence boom because of its strong macroeconomic fundamentals and resilient financial system. Speaking at the Kautilya Economic Conclave 2026, Malhotra said the rapid growth in AI investment has become an important driver of global financial markets, but a slowdown in AI investment or earnings could lead to a significant repricing of AI-related financial assets. He added that a correction in elevated AI valuations in advanced economies could potentially redirect capital towards Indian markets.
Malhotra identified AI-related valuation excesses, elevated global debt, leverage in the non-bank financial sector, growing private-credit exposures and cybersecurity threats as five key concerns for the international financial system. He clarified that these vulnerabilities do not currently indicate immediate financial stress, but said regulators and financial institutions need to remain alert. India remains exposed to external shocks through commodity prices, global financial conditions and capital flows, although the RBI Governor pointed to sound macroeconomic fundamentals and resilient bank and NBFC balance sheets as important buffers.
The Governor identified cybersecurity as the most immediate concern, particularly as sophisticated AI tools can increase the scale and speed of cyber threats. For banks and financial institutions, the comments underline the need to treat AI as both a technology opportunity and a financial, cyber and operational risk. Risk management frameworks therefore need to consider AI-related market repricing, cyber threats, technology failures, third-party exposures and interconnected financial risks alongside traditional credit, liquidity and market-risk assessments.
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