SEBI shares, 'How India’s Financial System Got Stronger Over the Last 8 Years'

India’s financial system has become more stable, diverse, and better prepared to face economic challenges in the past eight years, according to SEBI (Securities and Exchange Board of India). This progress is thanks to the country’s fast economic growth and improvements in financial regulations.

Referring to a report by the International Monetary Fund (IMF), SEBI said India’s financial sector has bounced back well from past troubles, including the 2010s financial strain and the COVID-19 pandemic. The non-banking financial intermediaries (NBFI) sector, which includes NBFCs, has grown and become more connected, while banks and NBFCs now have enough capital to continue lending, even if the economy slows down.

However, SEBI noted that NBFCs still need to be regulated based on their size and risk. The IMF also advised India to adopt stronger credit risk management practices like IFRS 9 and improve monitoring of personal loans, large exposures, collateral values, and related-party transactions.

To ease compliance pressure, SEBI has delayed the start of a new regulatory framework from April 1, 2025, to August 1, 2025. It also confirmed that no penalties will apply for exceeding lending limits until further notice.

SEBI also highlighted how India’s securities trading system has improved to manage risks better, with tools like the Corporate Debt Market Development Fund (CDMDF), swing pricing, and liquidity rules for bond mutual funds.

The IMF praised India’s growing financial inclusion and recommended strengthening support for digital and asset-based lending to help underserved groups. The insurance sector remains stable, with efforts underway to adopt risk-based regulations. The IMF also encouraged regular cybersecurity drills for banks to guard against digital threats.

Overall, India is steadily adopting global financial best practices in a way that suits its unique needs and economy.