The regulation of NBFCs began in 1964 to protect public deposits. A major shift occurred in 2006 when the RBI realized non-deposit firms also posed financial risks. Between 2010 and 2014, this thinking brought Core Investment Companies under a dedicated framework, where size and group structures started determining the regulatory intensity.
Synopsis
The regulation of NBFCs began in 1964 with a simple objective: To protect public deposits. But as the sector grew, the RBI realised that even companies which did not accept deposits could pose risks to the financial system. That led to a fundamental shift in 2006. In Part 2 of this series, we examine how, between 2010 and 2014, this thinking brought Core Investment Companies into a dedicated framework under the RBI's regulatory umbrella, and how size, borrowings, and group structures began determining the intensity of regulation.