for different prospects and challenges. 24. for example, the nbfc - mfi segment is going to shrink heavily as the big ten of them convert themselves into small finance banks in the next one year or so. i will hasten to add that this can yet bring higher impetus for the other nbfc - mfis to grow, not just because of the availability of space vacated by the big ten, but also because the capital that will be released when many of the converting nbfc - mfis pay off the current investors as a part of capital restructuring, and because of renewed interests by such venture capital aiming growth prospects in such conversions in the future. 25. the infrastructure nbfcs will have greater scope in the coming years, both because the economic growth will bring forth new projects and banks, having learnt lessons in the recent past, will have a restrained approach towards such projects. if the infra - nbfcs will have their structuring these projects in a careful way, they will have good prospects. 26. as the large exposure regime for the banks will apply by 2018, nbfcs will have space for market funding or loan funding of big corporate financing in the medium term. 27. loan companies will face enhanced consumer protection measures. they will be required to appropriately educate their workforce in selling right. 28. investment companies will have bright prospects, as the equity and corporate bond markets expand, along with economic growth and careful recalibration of bank finance in the wake of basle iii. regulation – the way forward 29. at present, there are several categories of nbfcs and regulations vary across these nbfcs. the committee on comprehensive financial services for small businesses and low income households ( chairman : dr. nachiket mor ) had recommended merger of various categories of nbfcs, into two viz., nbfcs and core investment companies ( cics ) and moving towards activity based regulation. the regulatory framework, put in place in november bis central bankers ’ speeches 2014, is a first step in this direction. going forward, we will work towards greater harmonisation of the regulations with a view to reducing the number of nbfc categories. 30. however, the reserve bank is alive to the developmental needs of the economy and therefore will continue to approve of new types of nbfcs if the economy will need them. one such is nbfc - account aggregator ( nbfc - aa ) about which the reserve bank

r gandhi : nbfcs – medium term prospects speech by mr r gandhi, deputy governor of the reserve bank of india, at the 1st nonbanking financial companies ( nbfcs ) summit, organized by the confederation of indian industry, mumbai, 21 december 2015. * * * assistance provided by shri c d srinivasan and shri anuj sharma is gratefully acknowledged. 1. i am happy to be addressing this first ever cii summit on non - banking financial companies ( nbfcs ) to deliberate on “ regulatory paradigm & contours of growth – vision 2020 ”. the context in which such a summit has been organised is also very apt. world over, there is an awakening, post the great financial crisis of 2008, about the existence, contribution, magnitude, significance and risks of non - banking financial sector. from a benign neglect of or indifference to this sector, either by default or by deliberate choice, the world has now become anxious and seriously concerned about it. this awakening has resulted in enhanced attention, monitoring and regulation of this sector. therefore, it is very apt that the sector has also noticed it and desires to seriously discuss its prospects in the changed scenario and realign itself with a renewed vision. global shadow banking monitoring report of fsb – 2015 2. the financial stability board ( fsb ), came into existence post financial crisis, when the leaders of the g20 countries decided to convert the then existing financial stability forum into fsb to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability. the fsb has been monitoring the shadow banking sector closely for the past five years and publishing its monitoring report. i will like to highlight some of the key findings from its latest report, as they will provide a worthwhile background setting for your deliberations today. 3. the 2015 report of the fsb presents the results of the fifth annual monitoring exercise using data as of end 2014 for 26 jurisdictions, which together account for about 80 % of global gdp and 90 % of global financial system assets. the report includes the results of the macro - mapping, including size and growth trends of the monitoring universe of nonbanking financial institutions ( munfi ) estimate, cross - jurisdiction analysis, trends in subsectors and interconnectedness with the banking system. it also discusses a narrower measure of shadow banking, which is constructed by filtering out non - bank financial activities that have no direct relation to credit