Shadow banks enjoy “certain flexibilities which allow them to do last-mile financing which banks can’t do,” said an executive at a non-bank. “Blurring the lines” between banks and non-banks would “be detrimental for India, where financial inclusion is still low.”
India's central bank is likely to propose tightening rules on "shadow banks" in a bid to strengthen solvency and sustainability of a sector that has been showing signs of stress in recent years, two sources said.
Read more about RBI likely to propose stricter regulations for shadow banks: Report on Business Standard. RBI looks to strengthen solvency and sustainability of a sector that has been showing signs of stress in recent years
India's central bank is likely to propose tightening rules on "shadow banks" in a bid to strengthen solvency and sustainability of a sector that has been showing signs of stress in recent years, two sources said.
The RBI could also suggest large NBFCs be required maintain a cash reserve ratio.
The Reserve Bank of India is likely to propose stricter regulatory norms for shadow banks in a bid to strengthen solvency and sustainability of a sector that has been showing signs of stress in recent years, two sources said. RBI began trying to move towards tighter norms for the sector after Infrastructure Leasing & Financial Services, the largest NBFC, went bankrupt in 2018, and Dewan Housing Finance Corp and Altico Capital defaulted on payments in 2019. The RBI is expected to set out its proposals in a discussion paper next week and recommend that bigger non-banking finance companies (NBFCs), or shadow banks, maintain a statutory liquidity ratio (SLR), the sources said.