There is global acclaim over India’s financial system for “its continued strengthening,” following the latest review made by both, the World Bank and International Monetary Fund (IMF). Their Financial Sector Assessment Program (FSAP) reports, dated October 2025 and February 2025 respectively, both emphasize a transformation in reforms since the last joint review in 2017, commenting on India’s resilience following episodes of financial stress and over the global pandemic.
Financial Sector Resilience and Reform
Both 16 entities attribute the relative strength of India to its financial sector reforms. Regulatory oversight has been widened and now applies to cooperative banks, with stricter prudential standards in place and with a more effective system of supervision. India’s continued efforts to enhance diversification of its financial sector and to recover soon from challenges have also been praised by the World Bank’s Financial Sector Assessment (FSA) as well as by the IMF’s Financial System Stability Assessment (FSSA).
These changes including scale based regulations for NBFCs have contributed in containing credit risk and making supervision smoother. But the reports also say banks and NBFCs need to do more to improve credit risk management and supervision.
Towards a $30 Trillion Economy
The World Bank report stresses that maintaining the momentum of policy reform is a pre-requisite to meet India’s ambitious goal: graduating to a $30 trillion economy by 2047. This is predicated on deeper financial inclusion, greater mobilization of private capital and efficient capital markets. India’s access to resources across multiple channels is seen as essential to fund the new infrastructure, manufacturing and emerging technologies that will undergird its future growth.
Capital Markets, Mutual Funds and Access to Finance
(Passive reforms to support the securities markets include better management of collateral, tighter norms for mutual fund liquidity and setting up of the Corporate Debt Market Development Fund.) These are mitigating reforms to support stable market supervision, and the construction of sustainable investment frameworks.”
The FSAP findings recommend more integrated oversight in the area of conduct risk, especially related to mutual funds. Micro-description Stiffer requirements on self-regulatory bodies are urged to encourage openness and protect investors in ever-deepening and ever more sophisticated securities markets.
Inclusivity and Financial Access
India: Financial Inclusion Drives Interest in World Bank and IMF Evaluations An emerging theme which has permeated both World Bank and IMF assessment papers is India’s increasing financial inclusion. “Through regulation and technological innovation, banking and financial services have been brought to millions of underserved households and small businesses. Improving access to finance is not just a social end – it is one of the keys to unlocking growth, productivity and stability across the economy.
Conclusion
India’s financial system is much stronger, more diversified and inclusive in 2025 than it was in 2017, say the World Bank and IMF. A durable reform process, enhanced regulatory oversight and interventions in sectors will lead the horse driven chariot of Getting to Global Forward. Even though some obstacles persist in the management of credit risk, supervision and conduct oversight, India’s determination to support inclusive growth and strong financial sector governance is a positive example for other emerging markets.
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