Inter-connectedness of Banks and NBFCs in India: Issues and Policy Implications
The recent global financial crisis (2007-09) has clearly highlighted the gravity of high financial inter-connectedness within the financial system. In the Indian context, this brief study attempts to explore the financial inter-connectedness between NBFCs (both deposit taking and non-deposit taking) with banking system. The study found that both NBFCs-D and NBFCs-ND-SI are highly dependent on the banking system for their funding, though there are regulatory limits at the individual bankâ€™s level to lend to NBFCs. NBFCsâ€™ exposures to banks in the form of deposits are however, very limited. The discouragement of NBFCs from raising public deposits has resulted in substitution of public deposits with borrowings from the banking system. The high dependency of NBFCs on banks as a whole makes the financial system vulnerable in a stressful situation. [RBI W P S (DEPR) : 21 / 2011]. URL:[http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/21WPN020112.pdf].
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- World Bank, 2003. "Non-bank Financial Institutions and Capital Markets in Turkey," World Bank Publications, The World Bank, number 15162, October.
- Jeffrey Carmichael & Michael Pomerleano, 2002. "The Development and Regulation of Non-Bank Financial Institutions," World Bank Publications, The World Bank, number 15236, October.
- James B. Thomson, 2009. "On systemically important financial institutions and progressive systemic mitigation," Policy Discussion Papers, Federal Reserve Bank of Cleveland, issue Aug.
When requesting a correction, please mention this item's handle: RePEc:ess:wpaper:id:4692. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Padma Prakash)
If references are entirely missing, you can add them using this form.