 "NBFCs")
Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao’s call for aligning the regulatory framework for non-banking financial companies (NBFC) with the “principle of proportionality” and scaling down their “network externalities within the financial system” throws a curve ball to the sector.
Talking about incentives to convert into banks and scaling down on network externalities could mean several things.
It could either be reducing the acceptance of public deposits and substituting them with external commercial borrowing (ECB).
Or it could be cutting down their connections with sections of the financial system so that any possible contagion arising out
