Archive · 3 Oct 2026
RBI Governor Warns Against Complacency Despite Financial Stability
India’s central bank governor said he does not see an immediate financial crisis.
Still, he urged banks and investors not to become careless.
He said long periods without trouble can make people take bigger risks and borrow more.
India once needed more than a decade to deal with problems caused by excessive lending.
He also said conflicts and other global changes make the economy harder to predict.
The West Asia conflict has added to inflation pressures, though India’s financial system has handled its supply shock well.
Malhotra warned that a slowdown in AI companies could cause financial assets to lose value quickly.
He added that a fall in AI valuations abroad might bring more investment into India.
RBI Governor Sanjay Malhotra said he sees no imminent signs of financial stress but urged continued vigilance.
He warned that long periods of stability can encourage risk-taking and leverage, while financial vulnerabilities can be costly to resolve.
Malhotra said India took more than a decade to address legacy excessive lending and non-performing assets from the early 2000s.
He said the financial system had absorbed the supply shock from the West Asia conflict, while the conflict had added to inflationary pressures and financial vulnerabilities.
He flagged possible AI-related market repricing and said valuation corrections in advanced economies could also benefit India through capital inflows.
- Who
- Reserve Bank of India Governor Sanjay Malhotra
- What
- He urged vigilance against financial vulnerabilities despite saying he sees no imminent signs of stress.
- When
- Saturday, at the annual Kautilya Economic Conclave; no calendar date is specified.
- Where
- The annual Kautilya Economic Conclave; the article does not specify its location.
- Why
- Malhotra said prolonged stability can encourage risk-taking and leverage, and that the costs of allowing vulnerabilities to build are high.
- Speaker
- Sanjay Malhotra, Governor of the Reserve Bank of India
- Event
- Annual Kautilya Economic Conclave
- Organizers
- Ministry of Finance and Institute of Economic Growth
- Past cleanup
- Malhotra said it took India more than a decade to clean up legacy excessive lending and non-performing assets from the early 2000s.
- Global risk cited
- The West Asia conflict has exacerbated inflationary pressures and elevated financial-system vulnerabilities.
- Net FDI
- Net FDI in the first four months of 2026–27 was reported at $13.43 billion, up 38% from the same period a year earlier.
- Foreign investor sales
- Foreign investors sold $10.35 billion of Indian stocks and bonds so far in 2026–27, following $16.59 billion in sales in 2025–26.