India needs to accelerate financial sector reforms and enhance private capital mobilisation if it aims to become a USD 30-trillion economy by 2047, the World Bank said in its latest Financial Sector Assessment (FSA) report.
The multilateral agency said India’s “world-class” digital public infrastructure and government programmes have significantly widened access to financial services for both men and women, but further efforts are needed to deepen financial inclusion and expand access to credit and investment products—especially for women and small businesses.
The assessment, part of the Financial Sector Assessment Program (FSAP) jointly conducted by the International Monetary Fund (IMF) and the World Bank, provides a comprehensive review of India’s financial stability, regulation and access. The exercise is mandatory every five years for 32 jurisdictions with systemically important financial sectors, including India.
“India welcomes assessment of the financial sector undertaken by the joint IMF–World Bank team,” the finance ministry said in a statement. The last FSAP for India was carried out in 2017.
According to the World Bank, India’s financial system has become more “resilient, diversified and inclusive” since the previous assessment, supported by reforms that strengthened regulation, improved supervision, and deepened capital markets. These measures also helped the country navigate multiple stress episodes in the 2010s and the pandemic period.
The report praised India’s expansion of regulatory oversight to cooperative banks, tightening of prudential norms, and organisational reforms to improve supervision. It also lauded the Reserve Bank of India’s scale-based regulation framework for non-banking financial companies (NBFCs), while recommending further strengthening of credit risk management systems across banks and NBFCs.
India’s capital markets have grown steadily, with the combined value of equities, government, and corporate bonds rising from 144 per cent of GDP in 2017 to about 175 per cent now. This expansion, the report noted, reflects a robust market infrastructure and an increasingly diverse investor base.
To sustain this momentum, the World Bank has suggested the development of credit enhancement mechanisms, risk-sharing facilities, and securitisation platforms to further mobilise private capital.
The FSA mentioned that deepening financial markets and broadening access to finance will be critical for India to achieve its 2047 economic vision. “Achieving India’s aspiration to become a USD 30 trillion economy by 2047 requires further impetus to the financial sector reforms to boost private capital mobilisation,” the report stated. |
