Key Details
The 2026 Financial Sector Assessment Program (FSAP) Review proposes changes to both which financial systems receive mandatory assessments and how deeply individual risks are examined.
Measure | Current framework | Proposed framework |
|---|---|---|
Financial systems on mandatory assessment list | 47 | 42 |
Assessed every five years | 32 | 21 |
Assessed every ten years | 15 | 21 |
India’s cycle | Five years | Five years |
The IMF Executive Board broadly supported a more risk-based approach. The figures above are from the staff paper’s proposed methodology, rather than findings from a fresh assessment of India.
The IMF Wants to Free Capacity for Risks Outside Its Regular Cycle
The FSAP examines financial vulnerabilities, regulation and supervision, and authorities’ ability to manage a crisis. Its work has grown more demanding as banks, non-bank lenders, investment funds and payment infrastructure have become more interconnected. Cyber threats, digital finance and climate risks have also widened the questions an assessment may need to address.
Much of the programme’s capacity is committed years ahead to mandatory reviews. The proposed shorter list—and fewer countries on a five-year cycle—would create room for timelier voluntary assessments and deeper work where new risks are emerging.
Future Reviews Would Begin Broadly, Then Go Deeper Where Needed
The IMF would retain the FSAP’s three core areas: risk analysis, financial-stability policies and crisis-management capacity. Initial diagnostics would cover all three, then determine which subjects warrant an in-depth examination in a particular country. The Board also favoured recommendations that are better prioritised, sequenced and linked to its regular country surveillance.
This makes the quality of the initial diagnosis consequential: a more focused review can devote greater attention to material risks, provided it does not overlook vulnerabilities outside the selected topics.
India’s Recent Assessment Shows Why Coverage Extends Beyond Banks
India remains on the proposed five-year list. The review uses India’s 2025 FSAP as an example of wider analysis: it included stress tests for non-bank financial companies (NBFCs) and investment-fund liquidity, examination of links across financial institutions, and assessments of physical and transition-related climate risks.
These are examples of work already undertaken in India, not new conclusions about the safety of its financial system. They show why an assessment of a large financial sector needs to consider how stress could move between banks, NBFCs, funds and markets.
What Is a Financial Sector Assessment Program (FSAP)?
The Financial Sector Assessment Program (FSAP) is an in-depth examination of a country’s financial system. It tests vulnerabilities and reviews supervision and crisis-management arrangements. For emerging economies, the IMF normally conducts it jointly with the World Bank; countries whose financial systems the IMF classifies as systemically important undergo mandatory stability assessments every five or ten years.
Policy Relevance
India’s five-year assessment cycle would remain intact, but the emphasis of each review could change. The IMF’s proposed initial diagnostics would decide where to investigate deeply. Indian regulators therefore need a shared picture of exposures across banks, NBFCs, investment funds and market infrastructure, so risks that cross their remits are visible when the review is scoped.
The other test is follow-through between assessments. FSAP findings should inform the IMF’s regular consultations with India and the work of domestic regulators, rather than wait for the next five-year review. India’s 2025 assessment provides a starting point: its work on non-bank liquidity, institutional linkages and climate risks identifies areas where changes in exposure and supervisory practice can be tracked over time.
Follow the Update Here: Periodic Review of the Financial Sector Assessment Program