Need to monitor 'shadow banking' in India: FSB
seen a continuing growth in shadow banking business in the recent years had half of them are emerging economies.
However, partly this growth can be due to an increase in the number of reporting financial companies in India, where regulatory framework requires all non-deposit taking companies with an asset base of USD 10 million and above to submit monthly returns. The number of companies reporting data to the Reserve Bank of India has increased sharply over time, FSB said.
India is one of the few jurisdictions where certain types of non-banking finance companies are allowed to accept deposits, it noted.
As per a case study on financial companies in India, which forms part of FSB report, the focus of NBFC regulation in India has "shifted to include systemically important non-deposit taking NBFCs in recognition of the fact that their inter-linkages with the broader financial system could pose increasing systemic concerns."
"Admittedly, there are data gaps regarding the small non-deposit taking NBFCs, but these affect an insignificant share of the sector.
"Requiring detailed disclosures by small NBFCs similar to the ones provided by the larger NBFCs would be too onerous for them and not commensurate with their size," said the case study, prepared on te basis of presentation by RBI.
"The NBFC sector is within a well-defined regulatory perimeter and not perceived to pose significant systemic risks at present. However, there are aspects which could pose systemic risks or give raise to regulatory arbitrage concerns," it added.
Globally, the shadow banking system represents an average 25
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