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Dilemma over bank licences: NBFCs struggle to make the cut for RBI's rules

The RBI has also tightened guidelines, narrowing the regulatory arbitrage that existed between NBFCs and banks

Photo: Reuters
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Photo: Reuters

Subrata Panda Mumbai
The IL&FS crisis came as a rude shock to those who thought circumventing regulations could be a blueprint for the lending business in India. India is a credit-starved country — banks’ total assets account for less than 70 per cent of GDP — so it’s not difficult to be successful as a non-banking financial company (NBFC).

The catch here is accessing funds. Where do NBFCs source their money? The biggest source is commercial banks, which the IL&FS crisis of 2018 choked off. The apparent silver lining was that in August 2016, the Reserve Bank of India (RBI) had opened the

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First Published: May 27 2022 | 6:11 AM IST

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