External shock risks rise as geopolitics, AI reshape global economy; near-term outlook uncertain: RBI governor
Reserve Bank of India Governor Sanjay Malhotra warned that rising geopolitical tensions and advancements in artificial intelligence (AI) are increasing risks of external shocks to the global economy. In the Financial Stability Report, he noted that while the Indian financial system has shown resilience, the asset quality of banks improved to a low of 1.8% in March 2026 but could decline to 4.1% in adverse scenarios by March 2028. Policymakers face significant challenges as these factors reshape economic stability.