## Opening Remarks by the Deputy Managing Director Antoinette M. Sayeh at the Launch of IMF Book on India’s Financial System

_IMF News, April 25, 2023_

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## Bibliographic details
- Published: April 25, 2023

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### India’s economic and global trajectory
- 1991: real per-capita income was just shy of $600.
- Today: real per-capita income has more than tripled.
- An estimated 400 million people in India have been lifted out of poverty just in the last 15 years.
- In purchasing power parity terms, India is the third largest economy in the world.
- India is expected to contribute about 15 percent to global growth this year.
- 1991: India was one of the world’s largest aid recipients; today it is a net donor.
- Current role: G20 Presidency with an agenda focusing on global public goods and strengthening international coordination around debt, crypto assets, climate and digitalization.

### Financial sector transformation and inclusion
- 1990s reforms and developments:
  - Increasing role of private sector banks.
  - Introduction of universal banking.
  - Adoption of international best practices in regulation and supervision.
  - Creation of the National Stock Exchange and electronic trading.
- Market effects:
  - Larger firms increased access to market-based funding through bond and equity markets.
  - Households and SMEs rely on banks and nonbank financial companies.
- Financial inclusion via public digital infrastructure:
  - Wide shift from cash to smartphone-based financial transactions over the past decade.
  - Unique biometric-based identifier underpins digital payment architecture.
  - Digital payments improved public finance efficiency by eliminating ghost employees and boosting revenue collection from the general sales tax while reducing tax compliance costs for businesses.
  - Digital systems expanded distribution of social benefits to previously unreachable populations.

### Pandemic response and crisis management
- 2020–2021: Indian authorities transferred 37 billion dollars in social benefits to people’s bank accounts, avoiding costly intermediaries and reducing leakages.
- External shocks faced: Asian financial crisis, global financial crisis, the pandemic, and the war in Ukraine.
- Domestic crises and responses:
  - 2018: default of systemically important nonbank financial companies.
  - Post-2018 reforms: upgraded regulation and supervision, introduction of a regulatory framework for nonbank financial companies.
  - Progress on bank recapitalization, corporate debt restructuring, oversight of financial market institutions, and crisis management.

### Remaining challenges and policy priorities
- Strengthen regulations for non-bank financial corporations.
- Promote improved governance across financial institutions.
- Reduce the public footprint in the banking sector.
- Manage spillovers from tightening global financial conditions.
- Adapt regulation and supervision to rapid technological change.
- Address impacts of climate change on financial stability.

### Climate change and financial innovation
- Climate vulnerability:
  - India is highly vulnerable to the effects of climate change.
  - Recommendation: broaden and deepen the sustainable finance market to support climate mitigation efforts.
- Financial innovation:
  - Offers opportunities for improved access to financial services for vulnerable populations.
  - Presents regulatory and supervisory challenges that require continual upgrading to avoid buildup of risks.

### IMF engagement and role of the book
- IMF interactions with India:
  - Annual Article IV consultations.
  - Regular Financial Stability Assessment exercises.
- Purpose of thematic analytical work:
  - The book provides a comprehensive view of India’s financial sector and analyzes specific financial sector policies to better support India’s growth potential.
  - Findings aim to inform policymakers’ reflections and public debate as India charts its future.

*Opening Remarks by the Deputy Managing Director Antoinette M. Sayeh at the Launch of IMF Book on India’s Financial System, April 25, 2023.*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/antoinette-monsio-sayeh](https://www.imf.org/en/about/senior-officials/bios/antoinette-monsio-sayeh)
- [India and the IMF](http://www.imf.org/external/country/IND/index.htm)
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_Source: https://www.imf.org/en/news/articles/2023/04/25/042523-dmd-sayeh-remarks-at-india-book-event_