Balancing Stability and Innovation in India's Financial Sector

The Economic Survey 2024-25 emphasizes the need for financial sector regulators in India to maintain a balance between stability and innovation to ensure financial inclusion. It highlights the critical role of independent regulatory bodies and stresses the importance of public consultation in regulation-making processes.

The Economic Survey 2024-25, presented in Parliament, underscores the necessity for financial sector regulators to achieve a delicate balance between stability and fostering innovation to promote financial inclusion.

Currently, the sector is overseen by independent regulatory bodies like RBI, SEBI, and others, along with FSDC, which coordinates efforts for financial stability and growth. The uniqueness of each regulatory body is shaped by socio-political contexts and specific domain requirements.

The survey alerts that while stability is paramount due to the country's financial literacy levels and economic status, it should not hinder innovation or market dynamics. Overemphasis on competition without proper safeguards can destabilize the system, making regulation-responsive improvements vital, as noted in the Union Budget 2023-24.

(With inputs from agencies.)