India seeks financial sector audit by IMF, World Bank

After carrying out a comprehensive health check-up of the financial sector in 2009, India has sought an assessment under the Financial Sector Assessment Programme (FSAP) of the International Monetary Fund (IMF) and the World Bank. “India did a self-assessment (by the Committee on Financial Sector Assessment, or CFSA) of its financial sector in 2009. This has given us the confidence to get our financial sector evaluated by international financial institutions like IMF and the World Bank. We have voluntarily sought a full-fledged Financial Sector Assessment Programme,” Finance Minister Pranab Mukherjee said at the second International Finance Conference at the Indian Institute of Management, Calcutta.  Referring to the Financial Stability and Development Council (FSDC), Mukherjee said the government would set up a Financial Sector Legislative Reforms Commission to rewrite and clean up financial sector laws.  “Without prejudice to the autonomy of market regulators, FSDC will undertake macro-prudential supervision of the economy, including functioning of large financial conglomerates, and address inter-regulatory coordination issues,” he said. FSAP, established in 1999, is a comprehensive analysis of a country’s financial sector. In developing and emerging market countries, FSAP assessments are conducted jointly with the World Bank. In these countries, FSAP assessments include two components: a financial stability assessment, which is the responsibility of the Fund, and a financial development assessment, the responsibility of the World Bank.