Updated: Ajay Shah corrects me and points out that this is not a true FSAP but an imitation of the real thing. Even less reason to take it seriously. Incidentally, I think that the real FSAP itself is a waste of time if not worse. But that is beside the point.
The Indian financial press is today full of stories based on the Financial Sector Self Assessment Report prepared jointly by the Reserve Bank of India and the Ministry of Finance.
I think the coverage given to this self assessment report is quite disproportionate to its true significance because the report is prepared as part of the country’s participation in the Financial Sector Assessment Programme (FSAP) conducted by the IMF and the World Bank.
As anybody who has prepared or evaluated a self assessment report knows, it is critically important for such a report to demonstrate (a) an awareness of major weaknesses and (b) some thinking about possible measures to overcome them. If these are present in the self assessment, the external evaluator can and often does condone all the weaknesses!
By these standards, the self assessment report does an admirable job. But by the same token, it is silly to think that the report reflects the thinking of the RBI or the government on any of these matters.