Goodbye shadow banking

Bad loans in some NBFCs will definitely rise but no one should complain. They are no longer shadow banks

Early this year, the boss of a large non-banking financial company (NBFC) wanted to know why the media always describe NBFCs as shadow banks. As our conversation progressed, he got mildly irritated.

A shadow bank is into the business of lending but is not subject to any regulatory oversight. The shadow banking system also refers to unregulated activities by regulated institutions.

The Reserve Bank of India (RBI) probably overheard us. By the year’s end, a string of new norms is in place to strengthen the regulations for this set of lenders which has been playing a critical role in Asia’s third largest