K V Kamath supports robust valuations, a thriving IPO market, and bank reforms while arguing that India is right to wait as the AI hype unfolds.

The global frenzy surrounding artificial intelligence (AI) is similar to the early dot-com boom, according to veteran banker and chairman of Jio Financial Services K.V. Kamath, and India would be wise not to jump into it. Additionally, he supported the government's push for public-sector banking consolidation, praised the increase in IPO activity as an indication of better corporate governance, and defended India's current stock prices as suitable for a rapidly expanding economy. "Waiting is preferable to paying the early-mover premium." While the world is experiencing a tremendous surge of enthusiasm about AI, Kamath stated at the Global Leadership Summit that "a bit of the hype has to die down" before the genuine economic worth of the technology becomes apparent. He compared the current AI wave to the internet bubble of the late 1990s, saying that although it is more technologically based, it still contains elements of excessive speculation. He recounted how many businesses "listed on Nasdaq saying they had no business plan, didn't know whether they would be in business, and didn't know when" during the "dot com" era. According to Kamath, India may benefit from its relative prudence outside of the current AI craze. According to him, the nation has historically profited from implementing significant technologies once costs have significantly decreased, usually to 20–25% of the initial expenses. "Waiting out six months, a year, a year and a half, two years, and joining the bandwagon when costs have reached what I call reasonable levels doesn't cost us anything," he stated. He went on to say that India shouldn't be afraid of missing out, noting that "being late to the party has always been good" since it allows the nation to employ tried-and-true, reasonably priced technologies instead of following fads. By entering a little later, you can escape the premium that comes with being an early mover and enable more realistic deployment. "You'd better get out of it now." "Appropriate pricing" for an expanding market Regarding the overall market, Kamath dismissed worries that valuations were discouraging foreign portfolio investors, stating he was at ease with Indian stocks selling at higher multiples. He acknowledged that some particular equities might exhibit "exuberance," but stated that "this is the right price for a growing economy." Additionally, he said that India's thriving IPO pipeline is a positive trend, especially in the finance and technology sectors. According to Kamath, the introduction of modern companies into public markets will "strengthen the core of what is happening in India" by making them adhere to stricter governance guidelines and market discipline. Banking reforms and growth momentum Regarding the economy, Kamath stated that domestic capital and prudent policymaking continue to sustain India's long-term growth trajectory. India should "aspire for 10 percent growth," he stated. He noted that since products like InvITs, REITs, and deepening capital markets have a variety of financing sources, concerns about funding growth are no longer pertinent. Regarding banking reforms, he called the government's decision to combine public-sector banks "the correct move at this point in time" and commended it for being made "at a time when things are good." It would provide "scale, bulk, and efficiency," which are necessary for a financial system powered by technology. In order to maintain fair competition with private lenders, Kamath further stated that public-sector banks ought to be permitted to draw in more foreign investment, endorsing a plan to increase the cap on foreign institutional investors from 20% to 49%.