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Shadow Banking In India: Nature, Trends, Concerns And Policy Interventions

Author

Listed:
  • SASHI SIVRAMKRISHNA

    (Kautilya Entrepreneurship & Management Institute, Bengaluru, Director, Foundation to Aid Industrial Recovery, Bengaluru, India)

  • SOYRA GUNE

    (Foundation to Aid Industrial Recovery, Bengaluru, India)

  • KASTURI KANDALAM

    (Foundation to Aid Industrial Recovery, Bengaluru, India)

  • ADVAIT MOHARIR

    (Foundation to Aid Industrial Recovery, Bengaluru, India)

Abstract

While the origin of shadow banks may be traced to the 1970s, developing countries have witnessed a massive growth of shadow banks in more recent decades. India too has seen a similar growth in shadow banks; however, the recent 2018 collapse of IL&FS Group, a major shadow bank, disrupted the credit cycle, stalled investment and even affected overall GDP growth. With experts warning that shadow banks are susceptible to systemic risks and crisis, it becomes imperative to understand the shadow banking system better. In this paper, we use exploratory data analysis – both quantitative and qualitative – to draw attention to the need for definitional clarity in the concept of shadow banks and how they operate. Trends in Indian shadow banking are discussed using data drawn from secondary sources. Systemic risks in India’s shadow banking sector are identified and policy interventions are discussed. The study is imperative for highlighting the importance of shadow banking in India, its growth and the evolving policy interventions regulating this important component of the financial system.

Suggested Citation

  • Sashi Sivramkrishna & Soyra Gune & Kasturi Kandalam & Advait Moharir, 2019. "Shadow Banking In India: Nature, Trends, Concerns And Policy Interventions," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 24, pages 29-46, December.
    • Handle: RePEc:aic:revebs:y:2019:j:24:sivramkrishnas
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    References listed on IDEAS

    as
    1. Acharya, Viral V. & Khandwala, Hemal & Sabri Öncü, T., 2013. "The growth of a shadow banking system in emerging markets: Evidence from India," Journal of International Money and Finance, Elsevier, vol. 39(C), pages 207-230.
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    More about this item

    Keywords

    shadow banks; non-banking financial companies; mutual funds; commercial paper; financial regulation; financial crisis.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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