Description

World Bank releases India Financial Sector Assessment (FSA) report highlighting improvements in resilience, diversification, and inclusion since 2017 FSAP, with recommendations for further reforms.

Summary

SEBI announces the release of World Bank’s Financial Sector Assessment (FSA) report for India, published on October 30, 2025, as part of the mandatory Financial Sector Assessment Program (FSAP) conducted jointly by IMF and World Bank. The report highlights that India’s financial system has become more resilient, diversified, and inclusive since the last FSAP in 2017, with improved securities market oversight backed by reforms including enhanced collateral management, sustainable investment frameworks, mutual fund liquidity requirements, and the Corporate Debt Market Development Fund (CDMDF).

Key Points

  • World Bank released India-FSA report on October 30, 2025; IMF released India-FSSA report on February 28, 2025
  • FSAP is mandatory for 32 jurisdictions including India, conducted every five years
  • Last FSAP for India was conducted in 2017
  • Financial sector reforms helped India recover from distress episodes of 2010s and the pandemic
  • WB acknowledges sound oversight in securities markets with recent reforms
  • Scale-based regulation for NBFCs recognized as appropriate for diverse industry
  • India’s Digital Public Infrastructure significantly improved financial inclusion for men and women
  • Insurance sector shows overall sound level of observance of Insurance Core Principles (ICPs)
  • Climate risk analysis highlights agriculture and banking sector resilience to short-term shocks

Regulatory Changes

No immediate regulatory changes announced. The report provides assessment and recommendations for future policy direction:

  • WB recommends developing integrated approach to monitoring conduct risks, especially for mutual funds
  • Suggests strengthening standards of self-regulatory organizations
  • Recommends further strengthening of credit risk management framework for banks and NBFCs
  • Calls for granular data and adaptive measures for climate risk management

Compliance Requirements

No specific compliance requirements. This is an informational disclosure regarding the assessment of India’s financial sector by international institutions.

Important Dates

  • October 30, 2025: World Bank released India-FSA report
  • February 28, 2025: IMF released India-FSSA report
  • 2017: Previous FSAP conducted for India
  • 2024: Assessment period for current FSAP

Impact Assessment

Positive Recognition: The report acknowledges improvements in securities market oversight, including:

  • Enhanced collateral management and business continuity for investors
  • Framework for sustainable investments
  • Mutual fund liquidity requirements
  • Corporate Debt Market Development Fund (CDMDF)

Strategic Direction: Report emphasizes need for further financial sector reforms to achieve India’s vision of becoming a USD 30 trillion economy by 2047, requiring enhanced private capital mobilization.

Securities Market Impact: WB’s recommendations for integrated conduct risk monitoring and strengthened SRO standards may shape future regulatory initiatives for mutual funds and market intermediaries.

Financial Inclusion: Recognition of India’s world-class Digital Public Infrastructure provides validation of financial inclusion efforts while identifying opportunities for broader product access for individuals and MSMEs.

Impact Justification

Informational report on India's financial sector assessment by World Bank and IMF. Acknowledges improvements in securities market oversight and regulatory framework. No immediate compliance actions required but provides strategic direction for future reforms.