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IRDAI Press Release on World Bank’s Financial Sector Assessment (FSA) Report under FSAP Mission, 202

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  • IRDAI Press Release on World Bank’s Financial Sector Assessment (FSA) Report under FSAP Mission, 202

The Insurance Regulatory and Development Authority of India (“ IRDAI ”) has issued a Press Release on World Bank’s Financial Sector Assessment (“ FSA ”) Report under FSAP Mission, 2024 (“ Press Release ”) dated November 12, 2025.

Key highlights of the press release are as follows:

  • The Financial Sector Assessment Program (“ FSAP ”) is a joint program of the International Monetary Fund (“ IMF ”) and the Word Bank (“ WB ”), that undertakes a comprehensive and in-depth analysis of a country’s financial sector. Since 2010, the exercise has been mandatory for 32 jurisdictions, including India, to be conducted every five years, and for another 15 jurisdictions every ten years.
  • The last FSAP for India was conducted in 2017. The IMF published the Financial System Stability Assessment (“ FSSA ”) Report in December 2017 and the WB published the Financial Sector Assessment (“ FSA ”) Report in the same month, December 2017.
  • Basis the assessment carried out during 2024, the IMF released the India-FSSA report on February 28, 2025 and the WB released the India-FSA report on October 30, 2025
  • The FSA Report highlights that India’s financial system has become more resilient, diversified, and inclusive since the 2017 FSAP. It acknowledges the role of financial sector reforms in strengthening stability and enabling recovery from the distress episodes of the 2010s and the pandemic.
  • The report emphasizes that achieving India’s vision of becoming a USD 30 trillion economy by 2047 requires continued financial sector reforms to enhance private capital mobilization.
  • The WB acknowledged India’s expansion of regulatory authority on cooperative banks, tightening of prudential norms, and the implementation of scale-based regulation for NBFCs. It further recommended strengthening of credit risk management frameworks for banks and NBFCs.
  • Further, WB acknowledged the oversight in securities markets to be sound, backed by reforms in collateral management investor protection, framework for suitable investments, mutual fund liquidity requirements, and the Corporate Debt Market Development Fund (“ CDMDF ”).
  • The Report recognised the contribution of India’s Digital Public Infrastructure and government programs in expanding access to financial services for both men and women. It encourages continued efforts to promote account usage and access to a wider range of financial products, particularly for women and MSMEs.
  • The FSA Report acknowledged the development of India’s insurance sector to be in line with global best practices, with a sound level of observance of the Insurance Core Principles (“ ICPs ”). The Report recognises areas of strength to include robust licensing standards, suitability requirements, enforcement powers, and public disclosure norms.
  • On climate risk, the WB observed that India’s agriculture and banking sectors remain resilient to short-term shocks but recommended greater focus on data collection, localized risk assessment, and the creation of a Sustainable Finance Roadmap and national Climate Finance taxonomy, to help domestic investors.
  • The WB noted India’s efforts to strengthen credit infrastructure through the implementation of the Insolvency and Bankruptcy Code, 2016 (“ IBC ”) and RBI’s out-of-court workout framework. Also, finance to MSME sector has been growing, backed by developing factoring system under the RBI-regulated factoring platform (“ TReDS ”) and Priority Sector Lending (“PSL”) framework. It suggested establishing a comprehensive MSME data observatory to enhance data availability and credit flow to the sector.
  • India’s capital markets have expanded significantly, rising from 144% to about 175% of GDP since the last FSAP. The Report suggested developing credit enhancement mechanisms, risk-sharing facilities, and securitization platforms to further mobilize capital.
  • The recommendations in the case of India FSAP are focused on carrying out further improvements in the structure and functioning of the financial system. Also, India remains committed to adoption of internationally accepted standards and best practices in a suitable manner, attuned to domestic needs and economic conditions.
  • The FSA released by WB can be accessed at “ https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099103025110514063 ”

A copy of the Press Release is attached for your ready reference.

Source category: IRDAI

Attachments

  • Press Release on World Banks Financial Sector Assessment(FSA) report under FSAP Mission

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