An RBI panel tries to find reasonable ground between the extremes of regulatory overkill and dangerous neglect
A working group headed by Usha Thorat, a former Deputy Governor of the Reserve Bank of India (RBI), has submitted a report on issues pertaining to non-banking financial companies (NBFCs). If the report is accepted, it will change some fundamentals. The group continues the Y.V. Reddy style of looking at regulation: Be extremely conservative and careful with size, be liberal and encouraging small efforts that do not pose a systemic risk. The report is an illustration of this style. There are two questions that need to be asked. Does the report address the issue of systemic risk? Will its recommendations create a barrier for newer and smaller institutions in continuing operations without regulatory overload?
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