RBI Governor Sanjay Malhotra on Saturday listed five major risks facing the global financial system, while stressing that India is navigating the uncertainty from a position of strength.

Speaking at the Kautilya Economic Conclave 2026 in New Delhi, Malhotra named AI-related valuation excesses, elevated global debt, leverage in the non-bank financial sector, growing private credit exposures and cybersecurity threats.

“It is not that I see any imminent signs of stress, but we need to remain alert to these risks,” he said.

Malhotra said the AI investment boom has been a major driver of global markets, but any moderation in AI investment or earnings could trigger a sharp repricing of financial assets.

For India, he said, such a correction could have a favourable impact by diverting capital flows towards domestic markets. Indian equity markets have already corrected from elevated valuations in recent months in an orderly manner, he added.

He said India’s sound macroeconomic fundamentals and resilient balance sheets across banks and non-bank lenders offer protection, though the country remains exposed to external shocks through commodity prices and capital flows.