India's Financial Fortitude: IMF Highlights Sector Resilience Amid Growth

The IMF's Financial Sector Assessment Program highlights India's financial system's growing resilience and diversity driven by rapid economic growth post-pandemic. With advancements in regulation, cybersecurity, and insurance sectors, India's financial system showcases robust adaptability, yet recommends reinforcing bank capitals and crisis simulations for enhanced resilience.

The Indian financial system has shown remarkable resilience and diversity, as highlighted by the latest International Monetary Fund (IMF) report. The report, part of the Financial Sector Assessment Program (FSAP) jointly undertaken by the IMF and the World Bank, underscores India's recovery from past financial distress and its performance during the pandemic.

The IMF's evaluation lauds India's systematic approach to regulating Non-Banking Financial Companies (NBFCs) and improvements in the securities market framework. Notably, the introduction of a Liquidity Coverage Ratio for large NBFCs and the Corporate Debt Market Development Fund reflects India's commitment to financial stability.

Despite the progress, the report suggests that some public sector banks may need more capital to sustain lending during adverse economic situations. Moreover, expanding cybersecurity crisis simulations and stress tests across sectors will further fortify India's financial stability. Overall, the report aligns with India's ongoing financial development plans.

(With inputs from agencies.)