Growth Trajectory of Shadow Banking in India – Concerns and Prospects

Abstract

A sound financial system is a pre-requisite for inclusive as well as sustainable growth of the economy. The Indian financial
system is dominated by the banking sector. Apart from the banking institutions, another integral part of the financial system
is Non Banking Financial Companies (NBFCs). The functions of such institutions are supplementary to the banking
functions except certain ways. Consequently, NBFCs are being globally recognised as shadow banks. In India, NBFCs are
referred to the shadow banks as they possess a significant role and place in the Indian economy since independence like
banks. However, the developments both at national and international levels have augmented the impact and growth of the
shadow banking all over the world and in India, particularly during the last decade. In this perspective, the present focuses
on the growth trends, issues of concerns and prospects of shadow banking in India and concludes with the implications
therefrom.