The Reserve Bank of India has flagged soaring valuations in artificial intelligence-related stocks as a potential risk to financial stability, warning that any sharp correction in the sector could spill over to markets, even as it said India's banking system remains resilient enough to withstand severe economic shocks.
In its June 2026 Financial Stability Report (FSR), the central bank said global markets have remained buoyant despite geopolitical tensions, with optimism fuelled by "strong corporate earnings, the AI-driven investment boom, and easy financial conditions." But it cautioned that the same AI rally has also created fresh vulnerabilities.
