measures via commercial banks ( through interest rate and bank credit channel ), but, on the contrary, the asset prices channel may become effective in the monetary policy transmission process. an expansionary monetary policy might fuel asset prices, which, in turn, might increase the leverage of the shadow banks, expand their balance sheets, reduce their risk premium and thereby increase lending to non - financial sector and finally the level of real activity3. d. procyclicity and amplification of business cycles 18. shadow banking activities, which broadly remain less regulated, have been reported to act pro - cyclically, which might amplify financial and economic cycles. their leverage would rise during booms ( as they face little problem in arranging funds ) as assets price rise and margin / haircuts on secured lending remain low. on the contrary, during the downturn phase ( as the funding becomes difficult ) as asset prices fall and margins / haircuts on secured loan become tighter, shadow bank get compelled to undertake deleveraging. 19. pro - cyclicality of shadow banks may also get exacerbated owing to their interconnectedness with the banks. fsb ( 2012 ) observed that inter - connectedness of the shadow banks with the banks might aggravate the pro - cyclical build - up of leverage and thereby heighten the risks of asset price bubbles, especially when the investment assets of the two systems are correlated. this pro - cyclicality in the financial system might amplify financial and business cycles. high pro - cyclicality of the shadow banking sector has implications for the real sector, which might also get affected adversely as funding by the shadow banks to the real economy during the economic downturn might take a hit. shadow banking and indian economy 20. the type of entities which are called shadow banks elsewhere are known in india as the non - banking finance companies ( nbfcs ). are they in fact shadow banks? no, because see also adrian, et al ( 2010 ). bis central bankers ’ speeches these institutions have been under the regulatory structure of the reserve bank of india, right from 1963 i. e. 50 full years before many in the world are thinking of doing so! evolution of regulation of nbfcs in india 21. in the wake of failure of several banks in the late 1950s and early 1960s in india, large number of ordinary depositors lost their money. this led to the formation of the deposit insurance corporation by the reserve bank, to provide

these achievements have to be strengthened and replicated across africa to further promote the inter - complementarity of goods, trade facilitation and free movements of the factor of production, amongst others. the process of integration would also assist in regional infrastructure development in critical areas like energy, transport, communication / ict systems, roads and rail transportation. this would reduce production costs and increase economic activities across the continent. in addition, it would also strengthen africa ’ s political voice, improve collective negotiations to achieve more favourable outcomes on the external front. other benefits would include enhanced access to international markets and fair price for resource exploitation as well as attracting investment flows to the continent. investment in human capital africa has a young population compared to the ageing societies across the world. skill acquisition is critical to turn this resource into wealth. for example, for the manufacturing sector to take off, the new development strategy must avoid the current fragmented approach to education which is not adapted to the developmental needs of the african economies, hence, emphasis should be placed on tailoring education to growth sectors. education and training in cutting edge technologies would enable countries to adjust more swiftly to the challenges of globalization as enterprises become more flexible and better able to absorb new technologies. as such an integrated approach to education would enhance human resources development and create sufficient skilled manpower desired for the enhancement of industrial production. in particular, acquisition of requisite skills is also crucial for the development of africa ’ s informal sector, which account for the lion share of employment. in the short - term, technical and vocational skills are critical for building agroallied industries using basic technology. utilization of natural resources for development aside human resources, the continent should leverage on the vast endowment of natural resources like land, water resources, solid minerals, oil and gas and renewal energy to launch itself into the next development phase. unproductive practices such as land tenure system must be discarded, while property rights, and rule of law must be enforced. agreements on mining rights must ensure fair pricing and sustainability of these natural resources. institution of good governance and zero tolerance for corruption institutional development and good governance anchored on the rule of law are paramount for sustainable development. strong political commitment on the part of the relevant authorities is also quintessential. enhancing the operation of public enterprises is essential to address corruption and improve efficiency. like china, african countries should encourage the adoption of a zero tolerance policy against corruption by instituting severe punishment to penalize and control / eliminate corruption. 7. 0 some