RBI Governor Highlights Potential for Increased Capital Flow to India Amid Global AI Valuation Decline
RBI Governor Sanjay Malhotra discusses how declining AI valuations may boost capital flow to India despite global investment slowdowns.
New Delhi, October 3 (Daily Kiran) : The Indian economy may see an increase in capital flow, even as the global investment cycle slows down due to declining valuations of artificial intelligence (AI) companies. This insight was shared by Sanjay Malhotra, the Governor of the Reserve Bank of India, during the Kautilya Economic Conclave 2026 held in New Delhi.
Speaking at the event, Malhotra noted that the recent surge in AI investments has been a key driver for global financial markets. However, he cautioned that any decrease in AI-related investments or earnings could lead to significant changes in the prices of financial assets linked to this sector. While such a decline poses risks for global markets, it could have a positive impact on India.
“If there is an improvement in AI valuations in developed countries, it could positively affect the flow of capital,” Malhotra stated. He also pointed out that the Indian equity market has seen corrections in high valuations in recent months, which he viewed as part of a necessary process.
The RBI Governor identified the excessive increase in AI-related valuations as one of five major concerns facing the international financial system. Other risks include rising global debt, leverage in the non-bank financial sector, increased exposure to private credit, and threats related to cybersecurity.
Despite these vulnerabilities, Malhotra emphasized that they do not necessarily indicate an imminent financial crisis. “I do not see immediate signs of a crisis, but we need to remain vigilant about these risks,” he remarked.
India is currently navigating a challenging global environment, supported by a robust economic foundation and strong balance sheets among banks and non-bank financial institutions. He acknowledged that fluctuations in commodity prices, global financial conditions, and capital flows make the country sensitive to external shocks, yet reassured that the domestic financial system remains resilient.
