Global Financial Crises: Lessons and Preparedness for the Financial Sector in India

The global financial system has faced recurring crises, each with profound implications for economies worldwide. The 2008 Global Financial Crisis (GFC) and the COVID-19 pandemic are notable examples, disrupting financial markets and exposing vulnerabilities across various sectors. This paper explores the lessons learned from these crises, focusing on the preparedness and resilience of India's financial sector. While India's regulatory framework and banking sector displayed relative resilience during the GFC, the crisis underscored areas requiring improvement, including risk management, liquidity frameworks, and external vulnerability management. The COVID-19 pandemic further emphasized the critical role of digital financial inclusion and technology in maintaining economic stability during periods of severe disruption.This study utilizes a mixed-method approach, analyzing quantitative data from regulatory bodies and qualitative insights from policy reviews and expert interviews. Key findings indicate that India has made significant strides in regulatory reforms, such as adopting Basel III norms and enhancing macroprudential measures. However, systemic risks, including high non-performing assets (NPAs) and dependence on external capital, remain areas of concern. The paper concludes with policy recommendations to strengthen India's financial sector, emphasizing the importance of technological integration, robust risk assessment models, and dynamic regulatory frameworks to navigate future crises effectively.