The Securities and Exchange Board of India published a note on the International Monetary Fund’s Financial System Stability Assessment (FSSA) for India under the 2024 Financial Sector Assessment Program (FSAP), which found the financial system to be more resilient and diverse than in the 2017 FSAP and identified areas for further supervisory and regulatory strengthening. On securities markets, the FSSA recognised enhancements aligned with international practice to manage emerging risks, citing the establishment of the Corporate Debt Market Development Fund, the introduction of swing pricing and liquidity requirements for bond mutual funds, and an expanded regulatory scope covering sustainability and investor protection measures for fast-growing equity derivatives. The assessment also noted a more diverse but increasingly interconnected non-bank financial intermediary sector and concluded that banks and non-banking financial companies have sufficient aggregate capital to support moderate lending even in severe macrofinancial scenarios, while recommending stronger bank credit risk management and more granular supervision over individual loans, collateral valuation, connected borrower groups, large exposure limits, and related-party transactions. The report flagged cybersecurity, climate change and system-wide contagion as key emerging risks, judged climate-related financial stability risks to be manageable but requiring improved data granularity, and called for broader cross-sectoral and market-wide cybersecurity crisis simulations and stress tests. The World Bank’s Financial Sector Assessment report is still due for publication. The note added that the FSAP recommendations largely focus on further improvements to the structure and functioning of the financial system and are broadly consistent with regulators’ own development plans, with adoption of international standards envisaged on a phased basis.

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