Regulation (reforms) of NBFIs

    Regulation (reforms) of NBFIs – The proliferation of NBFIs in the 1990s left a regulatory gap, which was bridged with the amendment of the RBI Act of 1934 in 1997. Since then, the RBI is introducing various regulatory measures to regulate the sector. The 1997 RBI Amendment Act is the most comprehensive effort to address the issue of laying down a regulatory mechanism for the NBFIs. The issuance o regulatory measures for the sector aimed them to regulate at par with the banks ensuring the protection of investors. The regulatory measures covered areas of compulsory registration, prudential regulation, investment norms, disclosure standards, strengthening of supervision etc, the tightening of regulatory and supervisory framework for NBFCs has also been relevant in the wake of rapid product development and diversification, sweeping changes in technology along with trends indicating consolidation in the financial sector. The broad thrust of the new Act has been to provide a greater degree of comfort and safety to depositors, while at the same time fostering the development of a healthy and diversified financial sector. Accordingly, entry level norms for and existing NBFCs have been laid down.