Reserve Bank of India Governor Sanjay Malhotra has cautioned that the financial system’s current resilience should not be treated as protection against future shocks.
Speaking at the Kautilya Economic Conclave on October 3, Malhotra said India is navigating the ongoing West Asia crisis from a position of strength, supported by strong macroeconomic fundamentals and resilient financial institutions. He also stressed that there is no room for complacency.
Malhotra noted that India remains exposed to higher commodity prices and external-sector pressures arising from the conflict. He said efforts to strengthen resilience include diversifying import sources, improving energy security, building strategic petroleum reserves, accelerating the energy transition, strengthening domestic manufacturing and expanding global market access through trade agreements.
He also highlighted emerging systemic risks that could originate outside traditional finance. According to Malhotra, a future financial crisis could be triggered by geopolitical events, cyberattacks or technological failures and then spread through interconnected financial channels.
The RBI Governor called for better monitoring, more granular data and resilience across banks, non-bank financial institutions, markets, payment systems, technology infrastructure and cross-border financial networks.
He said the objective of financial stability should not be to prevent every shock, but to ensure the financial system can absorb and contain their impact.
