Mumbai: India’s financial system has become more resilient and diverse, driven by rapid economic growth, according to a new IMF report.
The report, part of the Financial Sector Assessment Program (FSAP), was based on an assessment carried out in 2024. The World Bank’s Financial Sector Assessment (FSA) report is yet to be published.
The Reserve Bank of India (RBI) welcomed the assessment, calling it a thorough review of the financial system.
The IMF noted that India’s financial system has improved since the last FSAP in 2017. It recovered from past financial stress and withstood the pandemic well. The rise of Non-Banking Financial Institutions (NBFIs) and market financing has made the system more diverse.
The report found that banks and NBFCs have enough capital to handle economic shocks. However, some public sector banks may need to strengthen their capital base.
IMF praised India’s approach to regulating NBFCs and introducing bank-like liquidity rules for large NBFCs. It also appreciated improvements in securities market regulations.
India’s insurance sector was found to be strong and stable, supported by better regulations and digital innovations.
On cybersecurity, IMF said India has advanced risk oversight, especially in banking. However, it recommended expanding stress tests to strengthen cybersecurity resilience.
The IMF’s recommendations focus on further improving the financial system. Many of them align with India’s ongoing financial reforms.
(Except for the headline, this story has not been edited by Observer Odisha staff and is published from a syndicated feed.)
