World Bank India-FSA 2024 | Strong and Resilient Financial System with Reform Priorities

PR No.79/2025, Dated: 03.12.2025

The World Bank has released the India Financial Sector Assessment (India-FSA) 2024, offering an in-depth review of India’s financial stability, regulatory frameworks and institutional preparedness. The report underscores the progress made through wide-ranging reforms since 2017 and assesses remaining priorities for strengthening the financial ecosystem.

1. A More Resilient, Diversified and Inclusive Financial System

The assessment finds that India’s financial system has become:

1.1 More Resilient

• Capital and liquidity buffers across banks and NBFCs have strengthened.
• Post-2017 reforms, including IBC implementation, supervisory enhancements and cleanup of balance sheets, have improved system-wide stability.

1.2 More Diversified

• Growth of NBFCs, insurance, mutual funds, pensions and capital markets has reduced reliance on the banking sector.
• Market-based finance now plays a larger role in supporting credit and investment.

1.3 More Inclusive

• Expansion of digital access and targeted schemes has deepened financial inclusion.
• Households and MSMEs have benefitted from enhanced access to payments, credit and insurance products.

2. Recognition of Strong Regulatory Oversight

The India-FSA 2024 notes sound and coordinated oversight across key financial sector regulators:

• RBI (banks and NBFCs)
• SEBI (securities markets)
• IRDAI (insurance sector)
• PFRDA (pension markets)

The report also highlights the efficacy of India’s digital public infrastructure (DPI)—including Aadhaar, UPI, Account Aggregator and other foundational systems—in enabling secure, low-cost financial services at scale.

3. Key Recommendations from the World Bank

While acknowledging substantial progress, the assessment suggests further strengthening in the following areas:

3.1 Enhancing Credit Risk Management

• Improve early-warning systems and risk-assessment tools, especially within banks and NBFCs.
• Strengthen underwriting standards to reduce future asset-quality pressures.

3.2 Broadening Access to Financial Products

• Expand availability of credit, insurance and investment products across underserved regions and demographics.
• Support policies to deepen long-term financing markets.

3.3 Integrating Climate-Risk Measures

• Develop supervisory frameworks to assess climate-related financial risks.
• Encourage institutions to adopt climate-risk disclosures and green finance practices.

3.4 Improving MSME Data and Credit Infrastructure

• Enhance availability and quality of MSME-level data for better credit assessment.
• Leverage digital platforms and public infrastructure to strengthen MSME credit flows.

4. Conclusion

The India-FSA 2024 reflects India’s significant progress in building a modern, resilient and inclusive financial ecosystem. With continued reform momentum and targeted improvements in risk management, climate resilience and MSME data infrastructure, the financial system is well positioned to support sustained economic growth.

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