The FSAP report has urged India to accelerate financial sector reforms to achieve its long-term goal of becoming a USD 30 trillion economy by 2047.
Key Highlights of the Report
- Resilient system: Financial system is stronger and more diversified, with assets rising to about 175% of GDP (from 144% in 2017) with the state playing a dominant role.
- Digital strength: Digital public infrastructure has improved access, efficiency, and financial inclusion.
- Regulatory progress: Reforms by the RBI and SEBI have enhanced supervision, though challenges persist in NBFC oversight and risk management.
- India’s expansion of regulatory authority on cooperative banks, tightening of key prudential rules has been appreciated.
- Market development: Corporate bond and infrastructure financing remain shallow, with investors preferring government securities.
- Tax disparities: Uneven tax treatment between debt and equity discourages bond market participation.
Required Reforms
- Boost private capital mobilisation: Deepen bond and securitisation markets to attract long-term investors.
- Strengthen NBFC regulation: Refine scale-based frameworks and align with global prudential norms.
- Integrate digital and financial reforms: Link fintech innovations with broader financial inclusion goals.
- Sustain reform momentum: Maintain coordination among financial regulators to ensure market stability and growth.
- Mobilise green finance: Use DFIs (Development Finance Institutions) to fund low-carbon projects and reduce investor risk.
About FSAP
|
