Finance Current Affairs for RBI Grade B 2025 Preparation | Banking Current Affairs 2025 |Finance 360

Summary

In EduTap's latest session, the spotlight is on the IMF's Financial System Stability Assessment (FSSA) Report for India. Released on February 28, 2025, the report measures India's financial health since the 2017 assessment. Key focus areas include the banking sector's resilience, recommendations for improved credit risk management, and the evolving nature of non-bank financial intermediaries. The IMF applauds India's strides towards international standards but recommends further improvements in monitoring emerging risks, such as cybersecurity and climate change. Additionally, emphasis is placed on enhancing regulations for NBFCs, improving credit accessibility in underserved sectors, and advancing risk-based solvency standards in the insurance sector.

Highlights

• IMF praises India's financial system resilience post-pandemic 🌟.
• Calls for adopting the expected credit loss model in banks to be proactive 🔄.
• Non-bank financial intermediaries' diversity and interconnection are notable 🤝.
• RBI's regulatory measures for NBFCs earn IMF approval 👍.
• Cybersecurity, climate change, contagion risks highlighted as critical 🌍.

Key Takeaways

• IMF recognizes India's financial system's resilience and diversity since 2017 🌟.
• Focus on strengthening credit risk management in banks is crucial 🔍.
• Non-bank financial intermediaries have become more diverse and interconnected 🤝.
• Cybersecurity and climate change are critical risks needing attention 🌍.
• IMA recommends improvement in insurance sector regulatory frameworks 📈.

Overview

IMF's recent report throws light on India's financial sector's performance between 2017 and 2025. Amid economic adversities and a global pandemic, India showed notable resilience. The focus is on the IMF's appraisal of the structural strengthening measures adopted by the Reserve Bank of India (RBI) and suggestions for further growth.

The report acknowledges the complexity of non-bank financial intermediaries, commending their increased diversity and interconnection. It also highlights the robust frameworks for banking supervision and NBFC regulation in India, suggesting improvements in risk assessment strategies.

Emerging risks such as cybersecurity threats, climate change, and potential contagion within the financial system are underscored. The IMF advises the adoption of global best practices and continuous improvement in supervisory standards to maintain India's growth trajectory through strategic advancements.

Chapters

• 00:00 - 00:30: Introduction The chapter titled 'Introduction' discusses the release of a significant report by the International Monetary Fund (IMF), specifically the Financial System Stability Assessment (FSSA) report, which pertains to India. The Reserve Bank of India (RBI) has issued a press release about this report, signifying its importance. The session aims to delve into the details and implications of this report for India's financial system stability.
• 00:30 - 06:00: Financial System Stability Assessment Report The 'Financial System Stability Assessment Report' is focused on India's financial system. The report, which includes insights from the International Monetary Fund (IMF), is crucial for understanding the state and improvements needed within the system. It highlights both the commendable aspects and the recommended actions suggested by the IMF. Additionally, the report has been positively received by the Reserve Bank of India and Indian authorities, indicating a willingness to engage with the findings and recommendations.
• 06:00 - 13:00: Financial Sector Assessment Program The chapter titled 'Financial Sector Assessment Program' discusses the importance of an IMF report that has been highlighted in an RBI press release. The chapter emphasizes that the recommendations from the IMF are crucial and the press release plays a significant role in understanding these insights. The subject is addressed from the perspective of the RBI's press release, indicating its descriptive nature.
• 13:00 - 18:30: India's Financial Sector Resilience and Challenges The chapter begins by emphasizing the importance of preparing for questions, particularly objective ones, and introduces the main topics to be covered: the programs of the World Bank and the IMF. The chapter then focuses on the recommendations and report of the IMF, highlighting its significance to the overall theme of financial resilience and challenges in India. It serves as an introduction to the session's content, directed at an audience interested in finance, and encourages engagement with platforms such as YouTube and Telegram for continuous learning.
• 18:30 - 31:00: Regulations and Recommendations for Banks and NBFCs The chapter titled 'Regulations and Recommendations for Banks and NBFCs' discusses the Reserve Bank of India's important press release on the Financial Sector Assessment Program (FSAP) 2024. This program is a collaborative effort by the International Monetary Fund and the World Bank, aimed at conducting a thorough analysis of the financial sectors within countries. The chapter highlights the significance of this press release, which was issued on March 24th, 2025, focusing on the comprehensive evaluation of India's financial sector.
• 31:00 - 41:00: Securities Market and Insurance Sector The chapter discusses the financial sector of a country, encompassing the banking sector, insurance sector, securities market, and Non-Banking Financial Companies (NBFCs). It highlights that the International Monetary Fund (IMF) and the World Bank conduct a comprehensive analysis of a country's financial sector. This analysis identifies areas for improvement and further development within the financial sector. The IMF and the World Bank work together in this joint program to provide in-depth insights and recommendations.
• 41:00 - 47:00: Emerging Risks and Cybersecurity Chapter Title: Emerging Risks and Cybersecurity The chapter discusses crucial reports from two significant international organizations, which are highly relevant for RBI and NAD exams. It specifically highlights the Financial Sector Assessment Program, a collaborative initiative between these institutions, established in September 2010. Since its inception, this program mandates a comprehensive analysis of financial sectors, particularly for jurisdictions housing systemically important financial sectors.
• 47:00 - 53:00: Conclusion The chapter 'Conclusion' discusses the concept of systemically important banks, both at the domestic and global levels. It explains that State Bank of India, IC Bank, and HDFC Bank are considered domestically systemically important banks within India, emphasizing their status as 'too big to fail'. Similarly, the chapter alludes to the existence of financial systems at the global level that are deemed too big to fail, underscoring the critical role these institutions play in the economic landscape.

Finance Current Affairs for RBI Grade B 2025 Preparation | Banking Current Affairs 2025 |Finance 360 Transcription

• 00:00 - 00:30 hello everyone welcome to edutap and welcome to today's very important session so the the IMF that is the international monetary fund has released the financial system stability report uh that is the financial the IMF has released the fssa that is the financial system stability assessment report for the India okay so this is a very important report that the RBI has released the press release about so RBI has released the press release about the IMF that has released the financial
• 00:30 - 01:00 system stability assessment report of India so this report is very very important as it is talking about the whole of the financial system of our country that we are going to discuss that what IMF has said about the financial system of our country and let me tell you that the Reserve Bank of India and the India has welcomed the assessment so we will discuss that what are the good points that the IMF has MA mentioned and what are the recommendations that the IMF has provided for the financial system of our country okay so India's fin Cal system
• 01:00 - 01:30 resilient diverse IMF has reported IMF has also provided many of the recommendation and this has been mentioned in the RBI press release so this report or this press release becomes very very important that you can understand okay so good morning to all of you and in today's session we are going to discuss this very important report of the IMF from the rbi's press release perspective okay as the RBI has released the press release about it so let's get started and remember that from this particular topic a descriptive
• 01:30 - 02:00 question can also come and then objective question can also come so we will discuss about the program of the World Bank and the IMF and then we will discuss in depth the recommendations and the report of the IMF so let's get started but before that do subscribe to the YouTube channel of edutap so that you continue getting these relevant videos and do join our telegram channel in the telegram Channel you will be getting the PDF of the session and the link for the telegram channel is provided in the description box below and I hope I'm clearly Audible and visible so we are going to discuss a very important report of the IMF we are
• 02:00 - 02:30 going to discuss a very important press release of The Reserve Bank of India so RBI has released the press release on March 24th 2025 regarding the India India financial sector Assessment program 2024 so the financial sector Assessment program this is a joint program of the international monetary fund and the World Bank they undertake a comprehensive and in-depth analysis of a country's financial sector so there is a comprehensive and in-depth analysis that happens of the financial sector of a
• 02:30 - 03:00 country that is the banking sector involving the banking sector the insurance sector the Securities market and the nbfcs so you can understand that the whole of the financial sector of the country it is analyzed by the IMF and the World Bank and the IMF and the World Bank they provide a comprehensive and in-depth analysis of a country's financial sector that what are the Improvement areas what are the uh areas in which the financial sector can further work okay so this is a joint program of the IMF and the World Bank
• 03:00 - 03:30 both of these organizations are very very important and the reports from these organizations have been directly seen in your descriptive uh part of the RBI examination and the NAD examination okay so now what has happened so this is the financial sector Assessment program that is a joint program of these two International institutions since September 2010 the exercise has become the exercise of doing the analysis of financial sector this has become mandatory for jurisdictions with s systemically important Financial sectors
• 03:30 - 04:00 how many of you have heard about systemically important Banks the domestic systemically important Banks I hope many of you have heard that State Bank of India IC Bank HDFC bank they are the domestically systemically important banks in our country they are the banks that are too big to fail they are the two big to fail Banks similarly at the global level there are the financial systems that are too big to fail there are the financial system that are too
• 04:00 - 04:30 big to fail that means if any problem is coming in the financial sector of a particular country that is a very important financial sector that is interlined with the other Financial systems of the other countries so that Financial system is too big to fail okay so at the global level there are the systemically important Financial sectors that are the important Financial sectors that are too big to fail if any problem come in these Financial sectors it can affect the global economy it can affect the global
• 04:30 - 05:00 uh the Global Financial system okay so the systemically important Financial sectors these are the two big to fail Financial systems and the financial sectors okay so since September 2010 the exercise has become mandatory to analyze the financial sector of the different countries that are the jurisdictions that are the countries with systemically important Financial sectors currently it is mandatory for 32 jurisdictions for 32 countries including India so India is also under the systemically important financial sector that means India also
• 05:00 - 05:30 has a financial sector that is too big to fail that means if any problem comes in the financial sector of India that can affect the global economy that can affect the Global Financial system so India also has a systemically important financial sector So currently it is mandatory for 32 jurisdictions including India every 5 years this analysis happens this financial sector analysis happens and for another 15 jurisdictions every in every 10 years this analysis of the financial sector happens so you can
• 05:30 - 06:00 understand that India is one of the India has one of the systemically important Financial sectors and for India every five years there is the analysis that is done for the country's financial sector that is it healthy what are the reforms that have been undertaken what are the uh reforms that can be taken in the future so last financial sector Assessment program the financial sector Assessment program for India was last conducted in 2017 and the Financial system stability assessment
• 06:00 - 06:30 report this was published by the IMF on 21st September 21 21st December 2017 okay so this is the idea that Financial system or financial sector Assessment program this is the program under which IMF and the World Bank they assess they analyze the financial sector of a country okay now under the financial sector Assessment program once the assessment has happened so the financial system uh Financial system stability
• 06:30 - 07:00 report is released so it is released by IMF okay this is released by The IMF now this was last the financial financial sector Assessment program for India last happened in 2017 and the financial system stability report was last released by IMF in 2017 on 21st December 2017 okay now IMF has released the latest India Financial system a financial system stability assessment report so IMF has released the latest India
• 07:00 - 07:30 Financial uh system stability assessment report on their website on February 28th 2025 based on the assessment that is carried out during the 2024 this is the financial system uh stability assessment report that is released by The IMF so IMF on the basis of the assessment that has happened in 2024 so on the basis of assessment or on the basis of the analy analysis that the IMF and World Bank has done in 2024 for the financial sector of India the IMF has released the financial system system stability assessment
• 07:30 - 08:00 report on February 28 2025 while World bank's financial sector assessment report is due for publication so this is the idea so IMF has released the financial the IMF has released the financial system stability assessment report and this has been mentioned or this has been included in the rbi's press release now India welcomes the assessment of the Indian Financial system undertaken by The Joint IMF and World Bank team confirming to the highest International standards so they
• 08:00 - 08:30 have confirmed that India is moving towards the highest International standards and India in many cases has started to do the uh to have the highest International standards okay so India welcomes the assessment that is done by the IMF and World Bank in the joint form and uh this is the assessment of the Indian Financial system conforming to the highest International standards so imfs the international monetary fund has released has issued the financial system stabil assessment report highlighting
• 08:30 - 09:00 that India's Financial system has become more resilient and diverse since the last Financial system Assessment program in 2017 driven by rapid economic growth that has happened so this is the India financial sector Assessment program so this has been recently happened in 2024 and the financial system stability assessment report has been released by The IMF in on February 28th 2025 in which it has been said that India's Financial system has with stod the
• 09:00 - 09:30 pandemic well and has become more resilient since the 2017 since the last financial sector Assessment program okay now financial sector in India has shown recovery from various distress episodes in 2010s so in the 2010s uh so in the period of 2010 there was a lot of distress problems that were coming in the financial sector of our country during the 2010 the India's financial sector faced several crisis there was stressed corporate balance sheet the balance sheet of many of the banks many of the
• 09:30 - 10:00 NPCs was very much stressed there were heavy loans uh losses that were happening The NPS non-performing assets were very very high in the banks particularly the public sector undertaking Banks so there was stressed corporate balance sheet and the high npas that were faced by the banking segment that was specifically faced by the uh uh public sector uh public sector undertaking Banks so the default by I lfs in 2018 this led to a liquidity
• 10:00 - 10:30 crisis in the nbfc sector so in the IL NFS there was a default situation that happened so IL NFS this was a core investment company that used to invest in different institutions now it started to default the loan like it was not able to complete its obligations or it was not able to fulfill its obligations so the default started from the ilfs and a liquidity crisis started from there in the nbfc sector because IL NFS was a very big instit intution and as the
• 10:30 - 11:00 default was done by the ilfs there was a liquidity crisis that started in the nbfc sector so in the 20110 there was a lot of stress situation that was coming for India High npas were there in the banking sector in the nbfc sector there was liquidity crisis that started from the ilfs situation so many problems were coming in the 2010s but it has been said that the financial sector in India has shown recovery from the various distress episodes of the 2010s and withstood the the pandemic well that means we have
• 11:00 - 11:30 handled the pandemic very well so in terms of evolution that has happened of the financial sector landscape the non-banking financial intermediaries so non-bank Financial intermediaries the nonbank financial intermediaries you can understand that all the nonbank all the uh institutions that are not the banks but they are under the financial intermediaries they are in the financial sector so they are the non-bank financial intermediaries such as your nbfcs non-banking financial
• 11:30 - 12:00 companies your mutual funds the pension fund the insurance companies uh so these are the non-bank financial intermediaries these are the non-bank financial intermediaries these are not Banks but they are in the financial segment they are in the financial sector so these are the non-bank financial intermediaries so it is said that all these so in terms of EV evolution of the financial sector landscape non-bank Financial intermediary sector has become
• 12:00 - 12:30 more diverse they have become more diverse but more interconnected also so there is more and more uh entities that are popping up non-bank financial intermed means the mutual funds the insurance companies the pension fund as well as the fintech platforms the digital lending platforms so there are more and more diverse nature of non-banking financial intermediaries that are coming up but they are becoming more interconnected okay so in the category of non-bank financial institutions especially non-bank Financial companies so in the non-bank
• 12:30 - 13:00 financial institutions especially the nbfcs there are various different kinds of nbfcs that are present nbfc Factor nbfc account aggregator nbfc core investment companies nbfc uh so there are multiple kinds of nbfcs that are present in the domain okay so non-bank financial institutions especially the non-bank financial companies they are providing credit with wholesale financing and Market financing this has grown so financing provided or the credit provided by the nbfcs has grown and they are becoming more diverse
• 13:00 - 13:30 making the financial system more diverse and they are also becoming more interconnected so the non-bank financial intermediaries there are various institutions in the non-bank financial platform uh like the mutual fund pension fund digital lending platforms and your uh pentech platforms and such so they have become more Diversified they have become more diverse but more interconnected also so Banks and nbfcs they have sufficient aggregate Capital they have sufficient capital Capital with themselves to support the moderate
• 13:30 - 14:00 lending even in severe macro Financial scenarios so even if there is a severe macro Financial scenario that initiate there is a severe crisis that comes so if there is a moderate severe crisis that come in our country so even in that case the banks and the nbfcs they will be able to support the moderate lending so in case of severe macro Financial scenario in that case also there can be the moderate lending that can continue from the banks and the nbfc so that shows that Banks and the nbfcs they have
• 14:00 - 14:30 sufficient Capital first of all to handle the macro financial crisis in the country as well as to continue lending even in that kind of severe situation so that shows that India has enough of the capital buffers in the banks and the nbfcs on regulation and supervision of the nbfcs the IMF acknowledged India's systematic approach in which the India or The Reserve Bank of uh India has brought the Scale based regulatory framework in which the nbfcs are divided into into four layers so nbfcs are
• 14:30 - 15:00 divided into the nbfc base layer middle layer upper layer and top layer and as per the difference in the layers the different uh Norms regulatory Norms that are followed okay so the on regulation and supervision of nbfcs the IMF has acknowledged India's systematic approach for Prudential requirements for Prudential regulations of nbfcs with Scale based regulatory framework that helps RBI to gge the risk category of the nbfcs and put the important
• 15:00 - 15:30 regulations put the required regulations on the basis of the risk okay in the nbfcs IMF has appreciated India's approach to introduce the bank like liquidity coverage ratio in terms of large nbfcs now what is the liquidity coverage ratio this we have discussed in the previous sessions also liquidity coverage ratio is the high quality liquidity assets liquid assets that are available against the net cash outflows
• 15:30 - 16:00 in the coming 30 days okay so the banks have to maintain the liquidity coverage ratio of 100% that means against the net cash outflow the outflow of the cash that can happen in the next 30 days so let's say 1,000 cres of the cash, crores of the cash outflow can happen in the next 30 days so the banks have to maintain the high quality liquid assets that is the banks have to maintain the cash or the government securities or the other assets that are quite liquid at least up to this so to cover
• 16:00 - 16:30 this kind of so to cover this kind of cash outflow okay so the banks they have to uh like calculate the net cash outflow for the next 30 days and they have to maintain the high quality liquid asset to cover the net cash outflow so that is liquidity coverage ratio liquidity coverage ratio shows let recently the data for the indent Bank was released by The Reserve Bank of India so RBI told that indescent bank has the liquidity coverage ratio of 113% that means against the net cash
• 16:30 - 17:00 outflow for the next 30 days let's say the net cash outflow in the next 30 days is going to be 100 rupees so against that the bank was having the high quality liquid assets of 113 rupees that will be easily able to cover up the cash outflow that is going to happen from the bank in the next 30 days okay so that the depositors if they are coming to ask for their money the bank can easily provide the money the bank can easily do the cash outflow when required okay so the net cash outflow for next 30 days
• 17:00 - 17:30 against that the high quality liquid assets have to be maintained so that the cash outflow can happen in the easy manner okay now this Bank like LCR this has been introduced for the large nbfcs also so that the large nbfcs they are also able to take care of the outflows they are also able to take care of the cash outflows that are required to be done by the large nbfcs till now any confusion anyone any confusion in this so for uh on regulation and supervision of nbfcs
• 17:30 - 18:00 the IMF has acknowledged The Prudent regulations that the RBI has brought for the nbfcs in terms of Scale based regulatory framework and the IMF has appreciated that the RBI has made the large nbfcs to also follow the LCR uh just like the bank okay coming to the next point for supervision of banks IMF has suggested strengthening the credit risk management through the ifsr 9 adoption so the imfs said that for supervision of banks there is the
• 18:00 - 18:30 recommendation that is provided by IMF that IMF uh suggested strengthening the CR credit risk management the credit risk management should become stronger how it can become stronger so tell now what happens that in India the uh the accounts are maintained in such a manner that we see the incurred loss model we follow the incurred loss model that means loss is recognized loss is recognized when the default has actually happened or when there is the data or
• 18:30 - 19:00 when there is the fact that has been provided that the default has happened so once the loss has been incurred then it will be recorded then it will be recognized so in the incurred loss model the loss is recognized once the default has actually happened okay but in case of expected credit loss model in this there is a proactive method that is used and it is seen the loss is seen and the loss is recognized on the basis of the expected f future default that can happen
• 19:00 - 19:30 expected future default that can happen Okay so incurred loss model that we currently follow in this loss is only recognized once the default has actually happened so the bank will only recognize the default once it has actually happened so this is a very reactive approach where the bank is only thinking about the loss or bank is only recording the loss once the loss has actually the default has actually happened so in this case the bank is not able to take the measures beforehand the bank will take measures and the bank will see uh the
• 19:30 - 20:00 bank will take measures only after the loss has been recognized the default has actually happened when while in the case of expected credit loss model in this case the loss is recognized on the basis of expected future default that can happen so beforehand from the beforehand the bank can start putting some measures and bank can start putting some Provisions to handle the law that can come in the future so let's say that automobile industry is facing the problem now the bank has recognized that
• 20:00 - 20:30 the automobile industry the profits are decreasing many of the companies have made started to make losses so that means there is the expectation of the future default that any one of the small automobile company can make a default in the future so on the basis of the expected Credit Law the provisions the banks will start to take the provisions the bank will start to take the measures So currently we follow the incurred loss model that is the model that takes into account the law Lo only when the default has happened so the banks have very less
• 20:30 - 21:00 time to handle the situation while in the expected credit loss model it is the expected future defaults are seen that okay the economy's condition is bad the many of the industries they are not able to have profits the industries they are not able to sustain themselves so yes in the future the default can happen from this this this particular industry so we should start maintaining the provisions so International financial reporting standard n this is a global accounting standard for fin financial instruments that replaces the traditional incurred
• 21:00 - 21:30 loss model with an expected credit loss model okay that the loss should be recognized on the basis of expected future defaults so that on the basis of the loss that can happen in the future from now onwards the uh banks have started to take the measures and the provisions okay so this means Banks must proactively recognize potential credit losses the future credit losses that can happen rather than waiting for the defaults to actually happen and then after that taking the measures that is wrong so currently we are following the
• 21:30 - 22:00 incurred loss model that is a traditional model that is a model that has been followed till now but this has become very reactive that means Bank only takes step once the default has actually happened instead the IMF is saying that rather than following the incurred loss Model start following the international financial reporting standard n that is a global accounting standard where expected credit loss model is followed okay so IMF has suggested strengthening the credit risk management through if Sr 9 adoption and
• 22:00 - 22:30 upgrading the supervision for individual loans so if you have more supervision if you are uh seeing the loans like individual loans are given with prudent Norms being followed with prudent supervision with good supervision if the loans loans are being given there are lesser chances for the non-performing asset there are lesser chances for it to turn into non-performing asset okay collateral valuation should be done in the proper manner in the prudent manner that means the let's say gold is right
• 22:30 - 23:00 now inflated right now if the gold loan is given on the inflated value by the time that the loan has to be repaid let's say the loan is not getting repaid and after 2 years you will recognize that okay the gold value is not as you considered at the time of inflation okay so collateral value whenever the collateral value has been measured for the re real estate for the gold for any other collateral the collateral value or the collateral valuation should be done in a prudent manner and decreasing the inflation okay so that you have the actual collateral value uh after
• 23:00 - 23:30 deducting the inflation connected borrower groups so the connected borrower groups let's say in the Reliance Industries there is Geo Financial there is uh Reliance Telecom and such so the connected borrower group The Prudent supervision should happen when the loans are given to the connected borrower group because if one uh one entity falls down it affects the all the other connected borrowers okay so if one entity in a group is falling down it affects all the other connected entities so when the loans are given to
• 23:30 - 24:00 the connected borrower groups there should be prudent supervision that should happen large exposure limits have to be identified that uh if to a single borrower if a large loan is being given so there should be the maximum exposure limits that has to be identified in a good manner so large exposure limits have been identified by the RBI but it is said that you have to review the large exposure limits so that there is not the concentration risk that is happening because let's say a bank has large exposure let's say a bank has a
• 24:00 - 24:30 very large exposure of thousand cores to a single entity and this entity is falling down so the whole of the bank will be affected whole of the bank will come into the distress kind of situation so the concentration risk is very high when a single entity is provided with a large exposure with a large loan so large exposure loans have to be large exposure limits have to be identified in a good manner and related party transactions let's say that the bank has
• 24:30 - 25:00 many related entities that this bank it is connected with the entities let's say the bank has the promoters let's say XY Z ABC and the um DF so they are the promoters of the bank that means they have established the bank now let's say they have some other businesses also now they require the loans for that business so they can use the bank to get the easy loans without providing the full information to the bank so you can understand that the
• 25:00 - 25:30 related the related entities of the bank the related entities of the nbfcs they can misuse the banking structure they can misuse the nbfcs if they are related to that bank or nbfc okay so that has to be taken supervision has to be very strong in regards to the related party transactions if you a bank or the nbfc is giving the loan to a related party so that has to be prudently managed and the supervision should be very much strong okay so this is the idea now coming to
• 25:30 - 26:00 the Securities market so we have discussed about the bank and nbfcs the assessment on the banks and nbfs now coming to the assessment on the Securities market now remember that this assessment is provided in 5 years so after this like IMF has provided it in 2024 now the next one will be provided in the later on period after 5 years so this assessment is very important okay IMF acknowledges that the regulatory framework in Securities Market has been enhanced in line with the international
• 26:00 - 26:30 practices to manage and prevent the emerging risk so it has been recognized by the IMF that the regulatory framework for the Securities Market is quite strong and it has been as per the international practices notable improvements that has happened in the Securities Market include the corporate debt Market Development Fund so corporate debt Market Development Fund has been set up so this has been set up to act as a back stop facility like uh in the government securities Market there is prime
• 26:30 - 27:00 uh there is uh in the government securities Market there are primary uh uh the primary uh the entities okay that work as a market makers that work as a market makers they buy and sell the government securities to maintain the liquidity in the market so in the government securities there is the primary entities or uh what do we call it I am not able to recall the name name as per if anyone can suggest so they are
• 27:00 - 27:30 the entities in the government securities Market that work as a market maker that help in the buying and selling of the government securities to maintain the liquidity in the government securities so they buy the government securities when there are a lot of sellers of the government securities and they sell the government securities when there are a lot of buyers of the government securities in the market okay primary dealers I guess so now the corporate Market Development Fund will work as the market
• 27:30 - 28:00 maker or this has been set up to act as a back primary dealers yes so coroporate debt Market uh Development Fund this has been set up to act as a back stop facility for purchase of investment grade corporate debt Securities to provide confidence on these Securities when the participants are having the stress situation when there is stress in the corporate debt market so to provide the confidence to the buyers to provide the confidence to the investors to instill the confidence among the participants in the corporate debt
• 28:00 - 28:30 market during time of stress the corporate debt Market Development Fund purchases the debt Securities purchases the investment great corporate debt Securities okay and generally they enhance the secondary Market liquidity by creating a permanent institutional framework for Activation in times of Market stress so basically corporate debt Market Development Fund they provide the confidence to the market participants when there is any kind of stress that is coming so let's say there is stress uh uh that is coming in the financial markets so the corporate debt
• 28:30 - 29:00 Market Development Fund sells or buys they usually buy the corporate they usually buy not sell but they usually buy the corporate debt to instill the confidence on the market participants that the debt is not the problem the corporate debt uh instruments are not the problem generally the stress is coming in a period of time that will be sidelined in the other period of time okay so the corporate debt Market Development Fund has been developed instill the confidence on the investors
• 29:00 - 29:30 when there is stress that is coming in the corporate debt Market the corporate debt Market Development Fund purchases these corporate debt to instill the confidence as well as they also maintain the liquidity in the secondary Market okay next is the regulatory scope has also been expanded over emerging areas so there is the CDM DF fund that has been created introducing the swing pricing swing pricing means that when there is stress that is coming in the mutual fund so the nav value is adjusted
• 29:30 - 30:00 the net asset value of the mutual fund is adjusted so that the long-term investors in the mutual fund they are not getting harmed okay so in the swing pricing case a mechanism this is a mechanism that discourages Panic withdrawals during the time of stress in the mutual fund or during the time of the stress in the market not the mutual fund but let's say there is a stress that is coming in the market right now the market is falling down there is the market that is going down so when there is the stress that is coming in the market to discourage the Panic
• 30:00 - 30:30 withdrawals from the mutual fund the nav value is adjusted the net asset value is adjusted so that if you are Redeeming the uh if you are closing down the let's say you are closing down your um you are taking away your money basically so if you are taking away the money during the stress situation you will be bearing more cost as compared to the investors that are keeping their money in the mutual fund for the long period of time okay so this is the basic idea that a mechanism swing pricing is a mark M that discourages the Panic withdrawals during
• 30:30 - 31:00 the stress situation from the debt mutual fund by adjusting the nav based on Redemption pressure so nav value is adjusted so that the investors that are exiting right now during the market stress they bear a higher cost protecting the long-term investors in the mutual fund okay so this is Swing pricing so swing pricing has been introduced and liquidity requirements for the bond mutual funds have been increased so such kind these measures have been taken so that the uh Securities market so that the of the financial Market is working in a very
• 31:00 - 31:30 smooth manner or it should work in the smooth manner the regulatory scope has been expanded over emerging areas so regulatory scope has been expanded now in the sustainability area also the listing companies they have to report in terms of ESG Norms also environment social and global environment social and uh they have to governance Norms so in terms of environment social and governance Norms the listing companies they have to report in these Norms also
• 31:30 - 32:00 that what they are doing for the environment what how much they are spending for the sustainability how much they are spending or how their governance is so ESG reporting norms for the listing companies have been introduced and investor protection measures have been taken for the fast growing Equity derivatives products like the options and the Futures okay so for these derivative Market the investor protection measures have been taken no it is only for the debt mutual funds
• 32:00 - 32:30 it is only for the debt mutual funds because the debt corporate debt they are usually for a period of time let's say 5 years 10 years or such okay or one year or such corporate debt Securities like I will tell you it at the end of the session this is a basic term that you need to know from the static point of view but basically corporate corporate Deb security this is a debt instrument this is a debt
• 32:30 - 33:00 instrument through which the corporates that is the companies they can raise the money from the investors okay so they are usually for a time period okay so this is the corporate debt security that is this is the debt instrument through which the corporates can raise the money from the investors okay now IMF has stated that public digital infrastructure have significantly improved the retail Financial inclusion so public digital infrastructure such as your AAR card any enabled uh ekyc electronic kyc that
• 33:00 - 33:30 happens or the public digital infrastructure such as your UPI okay or Adar enabled the ekyc that happens so the IMF has stated that the digital uh the public digital infrastructure they have significantly improved the retail Financial inclusion the UPI system the uh kyc system through the Adar card and recommended the IMF has recommended that financially underserved sectors like the rural businesses the businesses in the rural
• 33:30 - 34:00 areas the informal sector the msmes so these are the sectors that are underserved let's say so in these sectors there should be access to credit that should be enhanced by strengthening the legal tax and informational infrastructure for asset based and digital lending for the collateral based and the digital lending there should be the enhancement that should happen there should be strengthening that should happen for the legal tax and informational infrastructure okay yes digit loer also the fssa report so the financial sector
• 34:00 - 34:30 stability assessment report acknowledges that India's Insurance sector is strong so till now we have discussed about the Securities Market till now we have discussed about the banks and the nbfcs any confusion till now now we are going to move forward with the insurance Market any confusion all clear no
• 34:30 - 35:00 confusion okay so the uh ma'am systemically see systemically systemically important banks are the State Bank of India IC Bank HDFC Bank systemically important insurers are the LC GIC and the N
• 35:00 - 35:30 NAIC NAIC so these are the three entities LC GIC and NAIC so they are the systemically important insurers in our country got it okay systemically important insurance industry it is systemically important insurers or systemically important insurance companies they are LC GIC and ni okay so let's continue
• 35:30 - 36:00 now now coming to the insurance sector so the okay so the financial financial sector uh stability assessment report acknowledges that India's Insurance sector is strong and growing with a significant presence in both the life insurance segment and The General Insurance segment the sector has remained stable supported by better regulations from the IR RDI and the irdi the insurance Regulatory and Development
• 36:00 - 36:30 Authority of India so irdi has been continuously taking steps for the digital Innovations irdi has introduced the BMA Trinity that is Bea sugam Bea vahak Bea Vistar so irdi is taking steps for the digital Innovations in the insurance sector domain so this is a very good initiative by the irdi it is bringing better regulations and digital Innovations in the insurance domain the report notes so the IMF report has noted that the India's progress in improving oversight so irdi has taken steps to
• 36:30 - 37:00 improve oversight to improve the oversight of the whole of the insurance sector risk management and governance is good and suggest so IMF suggests that further steps has to be taken toward risk based solvency so right now what we follow is one size fist all so how many of you know about the solvency margin of the insurance sector solvency ratio of the insurance
• 37:00 - 37:30 sector how many of you are aware about this what is the solvency ratio of the insurance sector solvency ratio is 150% that means against the liability of the insurance sector against the liability of the insurance sector the insurance sector has to maintain the assets of 150% so let's say that LC has the liability of 100 or let's say a XYZ insurance company has the liability of 100 cres so against
• 37:30 - 38:00 the liability of 100 cres the company has to maintain the assets of 150 crores so that is solvency ratio of 150% liability of an insurance company is that let's say that you have given uh insurance for the health insurance you have given or you have given uh the fire Insurance what if the fire actually happens so there are some obligations that you will have to fulfill there is some money that you will have to pay so this is the liability for the insurance companies that is your obligation that
• 38:00 - 38:30 can have that you might have to pay or uh so against the liability against your obligations of 100 crores you have to maintain the assets of 150 cres that means solvency ratio is 150% okay against your liability you must have the assets worth 150 or it should be 150% so this is the solvency ratio for all the insurance companies in the insurance sector what if some insurance companies are more risky what if some insurance companies are less risky they all have to maintain the same solvency ratio so
• 38:30 - 39:00 right now one size fit all this is the policy that is being adopted or this is the norm that is being adopted so what is happening currently that instead of a one size fit all instead of one siiz fitall IMF has said that we need to focus on the risk-based solvency ratio that the company insurance companies if they are more risky they should maintain more solvency ratio if they are less risky they should be allowed to maintain around the regulatory minimum okay so
• 39:00 - 39:30 this is the idea that the IMF has suggested further steps to a risk based solvency that is the solvency Ratio or the supervision Frameworks should be on the basis of risk basis not one size fitall all the risky companies or the risky insurance companies or the normal non-risky insurance companies or less risky insurance companies they all are following the same solvency ratio so IMF has suggested that there should be risk based veny ratios there should be risk based super supervision Frameworks and
• 39:30 - 40:00 stronger group supervision that let's say that a single insurance company it belongs to a larger Financial Group okay uh let's say SBI there is a SBI insurance company let's take an example so the SBI insurance company will be the part of the larger SBI group or let's say ICICI presedential that is the insurance company okay so IC I credential insurance company that is a part of larger c i bank group and such so the related the stronger group
• 40:00 - 40:30 supervision is required if a insurance company it is a part of larger Financial Group so the insurance company on that the supervision should be stronger because it might provide insurance for such banks that are in the Related Group okay so uh the IMF suggest further step toward the risk-based solvency uh requirements and supervision based on the risk uh based okay it acknowledges the IMF acknowledges that the insurance
• 40:30 - 41:00 company irdi if you have seen the recent irdi annual report irdi has itself said that it is going to move towards the risk-based or it is thinking about moving towards the risk-based solvency requirements and the risk based supervision framework so IMF has acknowledged uh the IMF has acknowledged the transition plan towards risk-based approach in the insurance sector that the irdi has already acknowledged about irdi has already said that we are thinking of moving towards the risk-based solvency requirements the
• 41:00 - 41:30 risk-based approach okay this reflect the India's commitment to a global best practices and resilient infr resilient Insurance sector so this is the idea that the IMF said IM have suggested that you have to take further steps toward the risk-based solvency requirements and the supervision Frameworks but the irdi has already started and the IMF has recognized this that the irdi the insurance regulatory Development Authority of India has already started taking steps or planning towards the
• 41:30 - 42:00 risk-based approach so I IMF has recognized this commitment uh to Global best practices and a resilient Insurance sector now coming to the last part of the session so IMF recommend that the financial stability should be the priority of The Regulators in terms of emerging risk there are various risk that are emerging okay cyber security is one of the major risk cyber security you can understand that if the cyber security is not not followed properly there is data privacy or data leakage if
• 42:00 - 42:30 that will uh the problem of data leakage can come if the cyber security is not strong the fishing attacks the frauds will become the fishing attacks the frauds will become more prominent and if the cyber security is not strong our whole digital ecosystem will uh will degrade okay so cyber security it is a very heavy risk that the RBI and the other Regulators have to focus on they have to focus more on cyber security
• 42:30 - 43:00 because the data privacy is a very important issue the uh frauds has to be decrease the digital ecosystem has to be protected another risk is climate change climate change based Financial Risk so there are Financial Risk based on climate change as the climate change is happening if rain happens less or if disaster happens what's the problem why there is the Financial Risk with the climate change try to understand it uh try to understand that there are
• 43:00 - 43:30 climate change related Financial Risk let's say that a disaster has happened so many of the big businesses that were present in that area or many of the small households that were present in that area because of the floods or because of the earthquake all these buildings are going down all these businesses are going down all these households are going down many of the and many of the households that had taken the home insurance or that had taken the insurance insurance against such natural disasters so the insurance
• 43:30 - 44:00 industry will feel the pressure from the entities as well as many of these businesses that had taken loan from the banks now they will not be able to return the loan their whole system has been broken so you can understand that if a disaster happens that not only affects the people that are involved but that also affect the whole of the financial system of the country because the insurance industry Insurance sector as well as the banking sector and the nbfcs they also face the problem because many of the people they will not be able to return the loans that they had taken
• 44:00 - 44:30 the collateral like many of the people that had kept their houses as collateral house has been gone so the whole collateral has been degraded or it has been destroyed because of the disaster so disaster it affects the livelihoods of the people it affects the house of the people but it also lead to the Financial Risk the last risk that we are going to talk about is the contagion risk let's say a bank has fallen down a bank is facing the crisis
• 44:30 - 45:00 and now many of the insurance companies many of the nbfcs that had invested in the bank they will also face the problem okay many of the mutual funds that had invested in the bank they will also face the problem the recent cases of indent Bank a small crisis a small problem because indent bank if you see the financial situation indent bank is fine it has good LCR it has good Capital adequacy ratio so indent bank has only faced the accounting problem and because of that accounting problem the whole share the whole Share value of the
• 45:00 - 45:30 indent bank has decreased so how many of the mutual funds how many of the NBC's how many of the other banks that had invested in this bank they are facing the problem so there is a contagion risk now this is a small problem in indust in Bank what if a bank has a major problem and the bank is on the verge of failing so the whole contagion problem will come into the other Banks and nbfcs also okay so in terms of emerging risk cyber security climate change and systemwide contagion need attention these three problems need attention the most
• 45:30 - 46:00 Financial stability risk from climate change appear manageable but warrant careful monitoring so right now we are able to manage the Financial Risk coming from climate change but we have to keep focus on this we have to keep knowledge about this okay we have to continuously monitor it the assessment suggested the assessment that is the financial system stability assessment report of the IMF has suggested enhanced data coverage with greater level of detail of mapping climate related Financial Risk so there is greater data coverage that is
• 46:00 - 46:30 required we need to collect the data so that in cases of disaster we are able to handle the disaster in a faster manner or at least we have the data for our country that where the disaster can occur okay next is IMF also analyzed cyber security framework in India IMF has found that Indian authorities have advanced cyber security risk oversight especially for banks however the IMF has said that the same measures that are being taken for the
• 46:30 - 47:00 banks the same measures has to be taken for the other entities also in the Securities Market in the insurance sector and in the nbfcs also IMF has stated that extensive cyber security crisis simulation and stress test for banks could be expanded for the other sectors also and Market wide events to further strengthen the cyber security resilience okay for for banks right now the cyber security is very strong and the RBI is having a strong oversight over the cyber security risk but this
• 47:00 - 47:30 same the simulation the cyber security crisis simulation and the stress test that are being followed for the banks they have to be followed for the other entities also the recommendations in case of India financial sector Assessment program are mainly focused on bringing about further Improvement so IMF has said that whatever you have done till now is very good it is appreciable so whatever recommendations IMF has provided they are uh about further Improvement in the
• 47:30 - 48:00 structure of and functioning of the financial system and many of the detailed recommendations are actually in conance in confirmity in line with the concerned authorities or Regulators own development plan like I have told you that the irdi has actually in its annual report that was re uh released a few months before so I itself has mentioned that we are thinking about transitioning to towards the risk-based solvency ratio and towards the risk based uh
• 48:00 - 48:30 supervision framework now the IMF has recommended the same thing that it has to be done faster so you can understand that The Regulators of our country their vision for the future so whatever improvements the IMF has said it is in line with the vision of The Regulators for the Future Okay so the recommendations in case of India they are mainly focused on bringing about further improvement in our financial sector and many of the recommendations that are provided by the IMF they in line with the uh vision and development
• 48:30 - 49:00 plans of the concerned authorities and Regulators India remains committed to adoption of internationally accepted standards and best practices in a faced manner we are slowly and slowly trying to have the best practices at the international level or the internationally accepted standards attuned to domestic needs if they are in the domestic needs if they are as per the domestic requirements and economic conditions wherever necessary so India remains committed to adopt the internationally accepted standards and
• 49:00 - 49:30 best practices okay so this is the idea so now this is the first question I hope you will be easily able to answer this question and let me tell you that this is the first question that you have to answer okay and this is objective question I hope you will be easily able to answer this question the second question is this this is the second question that why what are the key findings of the imfs latest India fssa report regarding the resilience and the evolution of India's financial sector
• 49:30 - 50:00 you have to provide the recommendations also okay now as you know that perspective 360° series is going on um Monday wednessday and Friday 5:00 p.m. okay so perspective 360 degree series is going on taken by J grer if you want the answer Writing Practice you can see the perspective 360° series Monday Wednesday and Friday and your answer will not be evaluated in the finance 360 series
• 50:00 - 50:30 because this series is for finance current affairs but in perspective 360° series your answers also get evaluated okay by the additional team that we have okay so yes the press release I have brought for you the whole press release I have not left out any major point from the press release so in the press release there was no major data point but the recommendations you have to keep in mind from the perspective of the IMF and the question can come on the report because you know that the World Bank WTO and the IMF
• 50:30 - 51:00 reports direct questions have been seen from these reports in your previous examinations of RBI and Abad okay specifically this report is important from the RBI perspective okay so this is the idea as you know that the questions have come on migration the questions have come on inequality because these reports were released by the important authorities by the important institutions so you can understand that the fssa report is released by it is published by IMF so this is a very very important report that you cannot miss
• 51:00 - 51:30 and I Tred to bring the important and all the points literally I have not missed any point from the press release I have not like I have not seen the report in the totality but the press release because I covered the RBI website and the finance current affairs so from the press release I've brought all the important points okay and that is the Mota Mota thing that you need to understand okay so this is it thank you very much for joining the session do give me the right answer of the homework session and this is it thank you everyone thank you for joining and if
• 51:30 - 52:00 you have any query you can comment down below I hope you enjoyed the session let's meet in the next session this session was a little complicated because the IMF has said a lot of difficult terminologies and different markets were involved different terminologies were involved so I tried to bring the definition of many of the um like statements or many of the terminologies so that in the pp like when you download the pp in the PDF format you will get the definition that I have brought in the pp okay so this is it thank you
• 52:00 - 52:30 everyone I don't know about the next Thursday okay next Thursday okay sorry if you asking about the revision session so I will be taking the revision session on next Thursday okay uh 6 p.m. at 6 p.m. at 6 p.m. on Thursday I will be taking your uh monthly revision session of the RBI website for your February 2025 okay so this is it thank you
• 52:30 - 53:00 everyone thank you for joining I hope you like the session do tell me in the comment section