Reserve Bank of India Governor Sanjay Malhotra has said a correction in inflated AI valuations abroad could benefit India. He was speaking at the Kautilya Economic Conclave 2026 in New Delhi on October 3. Malhotra said the AI investment boom has driven global markets in recent years.

But any moderation in AI investment or earnings could reprice financial assets sharply. Such a correction could divert capital flows toward India, he said. He noted that Indian equity markets have already corrected from elevated valuations in recent months.

He described that adjustment as orderly. Malhotra listed five risks facing the global financial system. They are AI valuation excesses, elevated global debt, leverage in non-bank finance, growing private credit and cybersecurity threats.

He said these do not point to immediate stress. But he urged alertness. India is navigating a tough global environment from a position of strength, he said.

Sound macro fundamentals and resilient bank balance sheets support the economy. The RBI’s policy committee meets from October 5 to 7. Most economists expect a 25-basis-point rate hike to 5.50 per cent.