**Executive Summary**
This press release, dated November 7, 2025, announces the release of the 2024 Financial Sector Assessment (FSA) report on India by the World Bank (WB). The FSA is part of the joint International Monetary Fund (IMF) and WB program (FSAP). The WB released the India-FSA report on October 30, 2025, following the IMF’s release of the India-FSSA report on February 28, 2025.
**Key Points / Main Content**
* **General Assessment**
* India welcomes the joint IMF-WB assessment of its financial sector.
* The WB’s FSA report highlights improvements in resilience, diversification, and inclusiveness since the 2017 FSAP.
* The report acknowledges financial sector reforms' role in India's recovery from distress episodes of the 2010s and the pandemic.
* Achieving India's vision of a USD 30 trillion economy by 2047 requires further financial sector reforms to boost private capital mobilization.
* **Regulation and Supervision**
* WB acknowledged India's expansion of regulatory authority on cooperative banks, tightening prudential rules, and reorganization of regulatory departments.
* WB welcomed the scale-based regulation for NBFCs.
* WB recommended further strengthening of the credit risk management framework for banks and NBFCs.
* Oversight in securities markets has been sound, supported by reforms such as enhanced collateral management, business continuity for investors, sustainable investments framework, mutual fund liquidity requirements, and the Corporate Debt Market Development Fund (CDMDF).
* WB indicated a way forward for better oversight through development of integrated approach to monitoring conduct risks and strengthening standards of self-regulatory organizations.
* **Financial Inclusion**
* India's Digital Public Infrastructure and government programs improved access to financial services.
* Suggestions were made to boost account usage, especially for women, and to facilitate access to a wider range of financial products for individuals and MSMEs.
* **Insurance Sector**
* India's insurance sector development is in line with peers, with a sound level of observance of Insurance Core Principles.
* Strengths include licensing, suitability requirements, enforcement powers, and public disclosure.
* **Climate Risk and MSME Sector**
* Agriculture and banking sector remain resilient to short-term climate shocks; granular data and adaptive measures are needed.
* WB recommended scaling up climate-related investment and developing a Sustainable Finance Roadmap and national Climate Finance taxonomy.
* Indian authorities have made efforts to strengthen credit infrastructure (IBC, RBI out-of-court workout framework).
* Finance to the MSME sector has been growing, backed by the developing factoring system under TReDS and the PSL framework.
* WB recommended monitoring and publishing comprehensive MSME credit data and establishing a MSME data observatory.
* **Capital Markets**
* Capital markets have increased from 144% to about 175% of GDP since the last FSAP.
* The report suggests developing credit enhancement mechanisms, risk sharing facilities, and securitization platforms.
* **Overall Recommendations**
* Recommendations mainly focus on further improvements in the structure and functioning of the financial system.
* India remains committed to adopting internationally accepted standards and best practices, attuned to domestic needs.
**Impact Analysis**
**Key Stakeholders Impacted:**
* **Banks and NBFCs**
* **Impact:** Subject to enhanced regulatory scrutiny, credit risk management framework, and supervisory measures.
* **Action Required:** Adapt to tightening prudential rules, implement scale-based regulations, and strengthen credit risk management practices.
* **Securities Markets**
* **Impact:** Subject to improved oversight and enhanced standards for self-regulatory organizations.
* **Action Required:** Adhere to new standards and enhance risk management practices.
* **Individuals and MSMEs**
* **Impact:** Benefit from improved access to financial services through digital infrastructure and targeted programs.
* **Action Required:** Utilize available resources and provide feedback on program effectiveness.
* **Insurance Sector**
* **Impact:** Will continue to align with global best practices in the insurance sector.
* **Action Required:** Maintain adherence to the Insurance Core Principles.
* **Investors**
* **Impact:** Benefit from a sound oversight system and a strengthened framework for sustainable investments.
* **Action Required:** Integrate climate risk into financial strategies, and enhance due diligence.
* **Financial Regulators**
* **Impact:** They will use the recommendations to continue developmental plans.
* **Action Required:** Undertake reforms in a manner suited to domestic needs and conditions.
Key Entities Referenced
Financial Sector Assessment Program (FSAP): A joint program of the International Monetary Fund (IMF) and the World Bank (WB) that undertakes a comprehensive and in-depth analysis of a country's financial sector.
World Bank (WB): One of the two entities responsible for the Financial Sector Assessment Program (FSAP); also conducts Financial Sector Assessment (FSA) reports.
International Monetary Fund (IMF): One of the two entities responsible for the Financial Sector Assessment Program (FSAP); also conducts Financial System Stability Assessment (FSSA) reports.
Reserve Bank of India (RBI): The central bank of India, which has been working with the World Bank and the IMF on the Financial Sector Assessment Program (FSAP).
India: The country whose financial sector is being assessed in the Financial Sector Assessment Program (FSAP).
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
November 07, 2025
India: Financial Sector Assessment Program, 2024
The Financial Sector Assessment Program (FSAP), a joint program of the
International Monetary Fund (IMF) and the World Bank (WB), undertakes a
comprehensive and in-depth analysis of a country’s financial sector. Since September
2010 the exercise has become mandatory for jurisdictions with systemically important
financial sectors. Currently, it is -mandatory for 32 jurisdictions, including India, to be
conducted every five years, and for another 15 jurisdictions every ten years. As per the
practice, as a concluding part of the FSAP, the IMF comes out with Financial System
Stability Assessment (FSSA) report and the World Bank brings out the Financial Sector
Assessment (FSA) report. Last FSAP for India was conducted in 2017. The FSSA
report was published by IMF in December 2017 and the FSA report was published by
World Bank in December, 2017.
2. Based on the assessment carried out during 2024, the World Bank has released
the India-FSA report on their website on October 30, 2025. IMF had already released
the India-FSSA report on their website on February 28, 2025.
3. India welcomes assessment of the financial sector undertaken by the joint IMF-
World Bank team.
4. WB’s FSA report highlights that India’s financial system has become more
resilient, diversified, and inclusive since the last FSAP in 2017. The report
acknowledges that financial sector reforms helped India recover from various distress
episodes of 2010s as well as the pandemic. It stresses that achieving India’s vision to
become a USD 30 trillion economy by 2047 requires further impetus to the financial
sector reforms to boost private capital mobilization.
5. On regulation and supervision of banks and NBFCs, WB acknowledged India’s
expansion of regulatory authority on cooperative banks, tightening of key prudential
rules, and reorganization of regulatory and supervisory departments to enhance
effectiveness. WB welcomed the scale-based regulation for NBFCs which recognises
the different needs of this diverse industry. WB has recommended further-
strengthening of the credit risk management framework for better supervision of banks
and NBFCs.
6. WB acknowledges that oversight in securities markets has been sound, backed
by reforms, including enhancing collateral management and business continuity for
investors, framework for sustainable investments, mutual fund liquidity requirements,2
and the Corporate Debt Market Development Fund (CDMDF). WB has indicated a way
forward for better oversight through development of integrated approach to monitoring
conduct risks (especially for mutual funds) and strengthening standards of self-
regulatory organizations.
7. WB acknowledged that India’s world class Digital Public Infrastructure and
government programs have significantly improved access to a wider range of financial
services for both men and women. Suggestions have been made for further boosting
account usage especially for women, and to facilitate access to wider range of financial
products for individuals and MSMEs.
8. The FSA report acknowledges that India’s insurance sector development has
been in line with the peers. WB’s graded assessment found an overall sound level of
observance of Insurance Core Principles (ICPs) reflecting India’s commitment to global
best practices and a resilient insurance sector. The report mentions licensing, suitability
requirements, enforcement powers, and public disclosure as areas of strength.
9. Under Climate Risk analysis, WB highlighted that agriculture and banking sector
remain resilient to short-term climate shocks, however granular data and adaptive
measures are needed, as localized risks, prolonged agricultural shocks, and a difficult
low-carbon transition could still put financial strain. They recommended that scaling up
of climate-related investment including the development of a Sustainable Finance
Roadmap and a national Climate Finance taxonomy. This may help domestic investors.
10. WB noted that the Indian authorities have made a concerted efforts to strengthen
the credit infrastructure, including implementing and strengthening the Insolvency and
Bankruptcy Code 2016 (IBC) and an out-of-court workout framework issued by RBI. It
noted that finance to the MSME sector has been growing, backed by the developing
factoring system under the RBI-regulated factoring platform (TReDS) and Priority
Sector Lending (PSL) framework. To further enhance credit to the MSME sector, WB
has recommended to monitor and publish comprehensive MSME credit data, including
demand side data along with establishing a MSME data observatory.
11. For India’s capital markets, WB has noted that the Capital markets (equity,
government bonds and corporate bonds) have increased from 144 percent to about
175 percent of GDP since the last FSAP. These gains have been supported by a robust
capital market infrastructure and diverse investor base. The report suggests developing
credit enhancement mechanisms, risk sharing facilities, and securitization platforms to
further mobilize capital.
12. The recommendations in case of India FSAP are mainly focused on carrying out
further improvements in the structure and functioning of the financial system. Many of
the detailed recommendations are in conformity with the concerned
authorities’/regulators’ own developmental plans. India remains committed to adoption
of internationally accepted standards and best practices in a suitable manner, attuned
to domestic needs and economic conditions, wherever necessary.
The FSA released by WB can be accessed at:
https://documents.worldbank.org/en/publication/documents-
reports/documentdetail/0991030251105140633
The Press Release issued by Department of Economic Affairs, Ministry of Finance
(MoF), Government of India can be accessed at:
https://dea.gov.in/files/press_release_documents/Draft%20Press%20Release%20-
Oct%2021.pdf
(Brij Raj)
Press Release: 2025-2026/1463 Chief General Manager