India's Financial System Shows Remarkable Improvement

According to a recent IMF and World Bank joint report under the Financial System Assessment Program, India's financial system has seen significant enhancements in robustness and diversity since 2017.

Enhanced Capitalization and Regulatory Oversight

The report highlights that non-bank lenders are now better capitalized, enabling them to withstand economic shocks while continuing to lend. The Reserve Bank of India (RBI) has been commended for its regulatory improvements, including a stricter oversight framework for NBFCs and liquidity coverage requirements.

Digital Infrastructure and Future Challenges

India's public digital infrastructure has played a pivotal role in broadening financial access. However, the IMF suggests that stronger legal and tax frameworks are essential to sustain this progress. The insurance sector remains stable, but challenges such as climate change and cybersecurity risks demand enhanced risk management strategies.