...In all fairness, the NBFC sector was not in regulatory shadows as RBI has, over the years, tweaked and implemented a differentiated regulatory regime for deposit accepting, systemically important, and other non-bank institutions. A few famous failures of deposit-accepting institutions in the 1990s led to legal and regulatory measures to curb and regulate the activities of looselyregulated institutions that garnered substantial deposits from areas where banking could not, and indeed would not, reach. New generation private sector banks and newly-energised and technology-powered public sector banks helped by filling in the gap and the situation was quickly contained. Regulatory focus then shifted to the non-deposit accepting NBFCs and attendant issues relating to classification, public funds and core investment companies. Once the framework for such lenders was put in place with a bank-like prudential and capital regime, it gave the market the confidence required for growth.........
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