RBI Governor Highlights Non-Traditional Risks to Financial Stability

Reserve Bank of India Governor Sanjay Malhotra stated on October 3, 2026, that future financial crises may originate from events outside the traditional banking sector, such as cyberattacks, technological failures, or geopolitical shocks. This development highlights a shift in focus from conventional financial sector risks to broader systemic vulnerabilities.

During his speech, Malhotra said that financial stability should not be defined by the absence of shocks, but by the ability of the financial system to absorb and contain disruptions. He explained that resilience must extend beyond banks to include non-bank intermediaries, payment systems, technology infrastructure, and cross-border networks.

Malhotra also stated that risks are increasingly interconnected and cross-border in nature. He called for scenario analysis to become a central part of risk management practices, emphasizing the need to prepare for a wider range of potential threats.

The Governor noted that advances in artificial intelligence, tokenisation, and new forms of financial intermediation have the potential to increase efficiency. However, he said these innovations must also uphold the integrity of financial institutions, ensure the finality of settlements, and maintain the singleness of money.

What the numbers show

• The RBI Governor delivered his speech on October 3, 2026.
• He identified three main sources of potential crisis: cyberattacks, technological failures, and geopolitical events.
• Malhotra referenced the growing influence of AI-related valuations in advanced economies.

Malhotra emphasized that resilience achieved today does not guarantee immunity in the future. He explained that the evolving nature of risks requires ongoing adaptation and vigilance across all segments of the financial system.

He also pointed out that a correction in AI-related asset valuations in advanced economies could have implications for capital flows into India. This observation linked global technological trends to domestic financial stability considerations.

Malhotra's remarks included a call for resilience measures to cover not only banks but also non-bank financial intermediaries, payment systems, technology providers, and critical third parties. He stated that cross-border financial networks should also be included in risk management frameworks.

According to Malhotra, the focus of financial stability efforts should shift toward strengthening the system's ability to withstand and contain the amplification of shocks, rather than solely attempting to prevent disruptions from occurring.

* This article is based on publicly available information at the time of writing.