India’s monetary system has turn into extra resilient and various, pushed by speedy financial development, and regulatory framework in securities markets has been enhanced in keeping with worldwide observe to handle and stop rising dangers, the Securities and Alternate Board of India (SEBI) stated on Saturday, citing a modern IMF-Monetary System Stability Evaluation (FSSA) report.
The markets regulator stated, in a press release, that the monetary sector in India has proven restoration from numerous misery episodes of the 2010s and withstood the pandemic nicely.
“By way of evolution of the monetary sector panorama, the Non-Banking Monetary Intermediaries (NBFI) sector has turn into various however extra interconnected. Banks and Non-Banking Monetary Corporations (NBFCs) have enough combination capital to help reasonable lending even in extreme macro-financial eventualities,” the SEBI stated, citing the IMF report findings.
On regulation and supervision of NBFCs, the IMF acknowledged India’s systematic strategy for prudential necessities of NBFCs with scale based mostly regulatory framework.
The IMF additionally appreciated India’s strategy on introduction of bank-like Liquidity Protection Ratio (LCR) for big NBFCs.
For supervision of banks, the IMF recommended strengthening credit score danger administration via “IFSR 9 adoption and upgrading supervision over particular person loans, collateral valuation, related borrower teams, giant publicity limits, and related-party transactions”.
The report additional said that notable enhancements embody establishing the Company Debt Market Growth Fund (CDMDF), introducing swing pricing, and liquidity necessities for bond mutual funds.
The regulatory scope has additionally been expanded over rising areas comparable to sustainability and investor safety measures for fast-growing fairness derivatives merchandise, in line with the IMF-FSSA report.
In keeping with the SEBI, the “FSSA report acknowledges that India’s insurance coverage sector is powerful and rising, with a big presence in each life and basic insurance coverage. The sector has remained steady, supported by higher laws and digital improvements”.
The report famous India’s progress in bettering oversight, danger administration and governance and suggests additional steps towards risk-based solvency/supervision frameworks and stronger group supervision. It acknowledged transition plans in direction of a risk-based strategy within the insurance coverage sector.
“This displays India’s dedication to world greatest practices and a resilient insurance coverage sector,” stated the capital markets regulator.
The Monetary Sector Evaluation Programme (FSAP), a joint programme of the IMF and the World Financial institution (WB), undertakes a complete and in-depth evaluation of a rustic’s monetary sector.
