RBI Governor Malhotra lists stretched AI valuations among five major risks facing the global financial system
4 October 2026
Reserve Bank of India Governor Sanjay Malhotra spoke at the Kautilya Economic Conclave, organised by the Finance Ministry.
He said the AI investment cycle has been a major support for global markets, but any slowdown in investment or earnings could trigger a sharp repricing of financial assets.
He named five major risks: stretched AI valuations, elevated global debt, leverage in non-bank finance, private credit and cyber threats.
A correction in AI-related valuations in advanced economies could have a positive spillover for emerging markets such as India through higher capital inflows, he said.
He also flagged that bond yields are hardening globally, which has implications for real interest rates in India.
In plain words
Repricing Repricing of assets — A sharp change in the market value of assets.
Bond yield Bond yield — The return an investor earns on a bond; it rises as bond prices fall.
Capital inflows Capital inflows — Foreign money entering a country's markets or economy.