This peer review examines two topics that are relevant for financial stability and important for India: the macroprudential policy framework, and the regulation and supervision of non-banking finance companies and housing finance companies. The review focuses on the steps taken by the Indian authorities to implement reforms in these areas, including with respect to the relevant recommendations in the 2012 Financial Sector Assessment Program (FSAP) report by the International Monetary Fund and the World Bank.

The peer review finds that progress has been made on both topics, but that there is additional work to be done. On the macroprudential framework, this involves fleshing out institutional and operational arrangements, strengthening risk analysis and more closely linking it to decision-making, and enhancing public communication. On finance companies, this involves improving the timeliness and granularity of data collection and analysis, enhancing risk assessments, reviewing regularly the regulatory perimeter to ensure that it remains appropriate, and adopting a more activity-based and risk-sensitive framework for these entities. The peer review report sets out recommendations to the Indian authorities in order to address these issues. These tasks are not unique to India, reflecting challenges faced by many other jurisdictions, and need to be considered as part of managing the transition to a more diverse and interconnected financial system.