Indian Financial Sector Self Assessment Report finds System Broadly Robust but Identifies Specific Concerns

March 30, 2009: India’s financial sector is generally sound, resilient and fairly liquid. The financial infrastructure is also assessed to be robust. But there are some concerns, according to the report of the Committee on Financial Sector Assessment (CFSA). These concerns include corporate governance in the co-operative sector, funding constraints of Non-Banking Finance Companies and the lack of up-to-date data to gauge household indebtedness. The report also finds serious gaps in the timely implementation of bankruptcy proceedings.

This self assessment of India’s financial sector—a comprehensive health check-up of the country’s financial sector--was carried out by the Committee on Financial Sector Assessment (CFSA) set up by the Government of India and the Reserve Bank in September 2006. The self assessment is motivated by the desire to ensure compatibility of the Indian financial sector with international standards and assess its overall stability. It also built upon past experience of the IMF/World Bank Financial Sector Assessment Program (FSAP) for India and other self-assessments and was enabled by the publication of the Handbook on Financial Sector Assessment, published jointly by the IMF and World Bank in September 2005.

Dr. Rakesh Mohan, Deputy Governor, Reserve Bank of India was the Chairman and Shri Ashok Chawla, Shri Ashok Jha and Dr. D Subbarao as Secretary, Economic Affairs, Government of India, the Co-Chairmen of the CFSA. The Committee submitted its six-volume Report, India’s Financial Sector – An Assessment, to the Hon’ble Finance Minister, Shri Pranab Mukherjee on March 25, 2009 at New Delhi.

Volume I- Executive Summary of the assessments and recommendations by the CFSA.
Volume II- Main Overview Report & provides the views of the CFSA, taking into account the Advisory Panel Reports
Volume III- Financial Stability Assessment and Stress Testing, covering macro-prudential analysis and stress-testing of the financial sector
Volume IV- Financial Regulation and Supervision, covering banking regulation and supervision, securities market regulation and insurance regulation standards
Volume V- Institutions and Market Structure, covering standards regarding accounting and auditing, corporate governance, payment and settlement systems and effective insolvency and creditor rights systems
Volume VI- Transparency Standards, covering standards regarding monetary and financial policies, fiscal transparency and data dissemination issues

REPORT FRAMEWORK ... Read More

REPORT FINDINGS

1. Sustainability of Macro Economic Growth... Read More

2. Financial Institutions ... Read More

3. Financial Markets... Read More

4. Financial Infrastructure... Read More

5. Transparency and Data Dissemination... Read More

6. Development Issues in the Socio-economic Context... Read More



IMF implements major lending policy improvements
Medium-term fiscal consolidation a priority for India, says IMF
S&P cuts India outlook to negative on unsustainable budget deficit
Fitch Affirms India’s Long-term foreign currency and local currency ratings Moody's changes credit outlook for Indian banking system to negative
Fitch affirms Indian Bank's ratings with long term stable outlook
India's Ratings Maintained by S&P on Growth Outlook
Indian Banking sector challenged by domestic, not global, factors

CLICK FOR SPECIAL SECTION ON GLOBAL FINANCIAL CRISIS
CLICK FOR MORE FEATURES & STORIES