IRDAI issued a Press Release dated April 08, 2025, titled “India: Financial Sector Assessment Program, 2024” (“Press Release”). The key highlights of the Press Release are as under:
- The Financial Sector Assessment Program (FSAP), a joint initiative by the IMF and World Bank, conducts in-depth evaluations of financial sectors, with mandatory assessments every five years for 32 jurisdictions, including India.
- The IMF released the latest India-FSSA report on February 28, 2025, based on the 2024 assessment.
- The FSSA report of the IMF highlights that the financial system in India has become more resilient and diverse since the 2017 FSAP; the Non-Banking Financial Intermediaries (NBFI) sector has grown more diverse and interconnected, with sufficient capital maintained by both banks and NBFCs.
- The IMF praised regulatory framework of India for NBFCs, and Liquidity Coverage Ratio (LCR) for large NBFCs, while recommending improved credit risk management and stronger bank supervision, including IFRS 9 adoption and better oversight of loans and exposures.
- Recommendations for bank supervision include adopting IFRS 9 and enhancing credit risk management.
- The IMF acknowledged improvements in securities market regulations in India, including the establishment of the Corporate Debt Market Development Fund (CDMDF), swing pricing, liquidity requirements for bond mutual funds, and expanded oversight in sustainability and investor protection for equity derivatives.
- IMF further stated that the public digital infrastructures have improved retail financial inclusion, and recommended to enhance credit access for underserved sectors.
- The FSSA report highlights that the insurance sector of India is strong and growing, supported by improved regulations and digital innovations. It suggests further steps towards risk-based solvency and supervision frameworks, reflecting the commitment of India to global best practices.
- IMF recommended that financial stability shall be the primary objective of the macroprudential authorities.
- The IMF identified cybersecurity, climate change, and system-wide contagion as emerging risks requiring attention.
- The IMF also found that the cybersecurity oversight is already advanced in India, especially for banks, but recommended broader crisis simulations and stress tests for better resilience.
- The India FSAP recommendations focussed on enhancing the structure and functioning of the financial system, aligning with the development plans of the Regulator, while India remains committed to adopting international standards and best practices, tailored to domestic needs and economic conditions.
- The FSSA released by IMF can be accessed at:
IMF India-FSSA Report
A copy of the Press Release is attached for your ready reference.
Source category: IRDAI
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