2025, Vol. 6, Special Issue 3
Shadow banking in India: Risks and the need for a robust regulatory framework
Author(s): Dhannya Jayeshkumar, Shilpa Chabukswar and Kishor Nikam
Abstract: Shadow banking in India, primarily driven by Non-Banking Financial Companies (NBFCs), plays a critical role in credit delivery and financial inclusion, complementing the formal banking sector. However, its rapid growth, lack of transparency, and operations outside stringent regulatory oversight pose significant systemic risks, as evidenced by the 2018 IL&FS crisis. This paper examines the nature, risks, and regulatory challenges of shadow banking in India, emphasizing the need for a robust regulatory framework to mitigate systemic vulnerabilities and ensure financial stability. Using a systematic literature review and analysis of secondary data, we identify key risks such as liquidity mismatches, interconnectedness with banks, and regulatory arbitrage and propose a scale-based, activity-focused regulatory approach to balance financial innovation with stability.
DOI: 10.22271/27084515.2025.v6.i3Sa.800
Pages: 75-79 | Views: 118 | Downloads: 39
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How to cite this article:
Dhannya Jayeshkumar, Shilpa Chabukswar, Kishor Nikam. Shadow banking in India: Risks and the need for a robust regulatory framework. Asian J Manage Commerce 2025;6(3S):75-79. DOI: 10.22271/27084515.2025.v6.i3Sa.800
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