India needs to bolster level of capitalisation of state-owned banks: IMFDate: 12 April 2019 Tags: World Economy
International Monetary Fund’s (IMF) Financial Sector Assessment Programme (FSAP) for India has recommended bolstering level of capitalisation of some banks, particularly government-owned banks. This is required considering high level of non-performing loans in India.
Highlights of FSAP for India
It also has recommended resolution and recognition of Non-performing loans as part of process of cleaning up the banking system of non-performing loans. It also acknowledged that some steps that were taken by authorities to boost capital buffers in banks and also to improve governance in state-owned banks that have had some positive impact.
Financial Sector Assessment Programme (FSAP)
- It is comprehensive and in-depth analysis of country’s financial sector. Its assessments are joint responsibility of the IMF and World Bank in developing economies and emerging markets and of IMF alone in advanced economies.
- It includes two major components: (i) financial stability assessment, which is the responsibility of the IMF, and (ii) financial development assessment, which is responsibility of World Bank.
- Two-fold goal of FSAP assessments: Gauge stability and soundness of financial sector and assess its potential contribution to growth and development.