BS Banking Annual: Many NBFCs may become poor cousins of their bigger peers

The proposed four-layered structure for NBFCs is for a progressive increase in the intensity of regulation, but it will also cut down the space for arbitrage

When the Reserve Bank of India’s (RBI’s) internal working group (IWG) suggested in November last year that shadow banks with assets of over Rs 50,000 crore could aspire for a banking licence, a collective gasp went up: Here was a window to move on in life. Only a few can hope for a banking licence. So, what happens to the rest of the crowd? And, will this model fly in the days ahead?

A total of 9,601 non-banking financial companies (NBFCs) were registered with the RBI in 2019-20 — 66 of them deposit-accepting, and 278 systemically important non-deposit accepting entities.