Financial Sector Assessment (FSA) report 2025

Why in News?

The latest Financial Sector Assessment (FSA) report has stated that India would require impetus to boost private capital mobilization for becoming a $30 trillion economy by 2047.

• Released by – World Bank (WB)
• Key takeaways – India’s financial system has become more resilient, diversified, and inclusive since the last Financial Sector Assessment Program (FSAP) in 2017.
• India’s capital markets (equity, government bonds and corporate bonds) have increased from 144 percent to about 175 percent of GDP since the last FSAP.

Financial Sector Assessment Program (FSAP), a joint program of the International Monetary Fund (IMF) and WB, undertakes a comprehensive and in-depth analysis of a country's financial sector.

• Highlights – WB acknowledged - the financial sector reforms helped India recover from various distress episodes of 2010’s as well as the pandemic.
• India’s expansion of regulatory authority on cooperative banks, tightening of key prudential rules, and reorganization of regulatory and supervisory departments.
• Scale-based regulation for NBFCs that recognises the different needs of this diverse industry.
• Business continuity for investors, framework for sustainable investments, mutual fund liquidity requirements, and the Corporate Debt Market Development Fund (CDMDF).
• Oversight in securities markets has been sound, backed by reforms, including enhancing collateral management.
• Recommendations – Further-strengthening of the credit risk management framework for better supervision of banks and NBFCs.
• Development of integrated approach to monitoring conduct risks (especially for mutual funds) and strengthening standards of self-regulatory organizations for better oversight.
• Developing risk sharing facilities, and securitization platforms to further mobilize capital.

As per 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.

References

1. The Hindu| Financial Sector Assessment (FSA) report 2025
2. The Economic Times| reforms needed for $30 tn economy: WB report on India