emerging market economies has come down. india is, however, amongst very few countries which have shown a growth in the share of total financial assets held by nbfis. in essence, the data indicates that nbfc sector in india remains a critical cog in the wheels of economic growth. as of march 2023, nbfcs credit to gdp ratio stood at 12. 6 per cent and the sector has grown to become 18. 7 per cent of banking sector assets as on march 2023 as compared to 13 per cent ten years ago ( march 2013 ). a very notable feature of indian nbfi sector is the predominance of lending companies. while globally, collective investment vehicles such as money market funds ( mmfs ), fixed income funds, mixed funds, credit hedge funds, real estate funds, etc. contribute 1 / 7 bis - central bankers'speeches to around 74 per cent of the nbfi sector assets, the indian case is quite different. this feature, combined with the fact that nbfcs have assumed certain significance and criticality over last few years, makes it imperative that the regulations of the nbfc sector keep pace with the changing landscape and move from a light touch regulatory approach to a more calibrated and nuanced approach to address the growing interlinkages and emerging risks in order to safeguard financial stability. it may perhaps be worthwhile to first take stock of the state of the affairs in the nbfc sector. the sbr framework for nbfcs was issued on october 22, 2021 and it became effective from october 1, 2022. usually, the impact of such a reform can only be assessed in medium to long term. however, the initial assessment suggests that the nbfc sector has become stronger and resilient post introduction of the sbr framework. our interaction with industry also suggests that the framework has achieved the intended effect of proportionate regulatory burden on the entities based on the parameters of size, complexity and interconnectedness, among others. as on september 30, 2023, nbfcs in the base, middle and upper layers constituted 6 per cent, 71 per cent and 23per cent of the total assets of nbfcs, respectively. the latest edition of the financial stability report ( fsr ) 3 notes that aggregate lending by nbfcs rose by 20. 8 per cent ( y - o - y ) in september 2023 from 10. 8 per cent a year ago, primarily led by

. genuine markets for both products and credit emerged after the reforms of the early 1990s. as slide 13 shows, the persistent inflationary conditions during the 1990s were responded to by significant monetary actions in terms of both rates and liquidity management. as the inflation rate trended lower, a process to which the monetary policy actions of the period contributed, the policy stance in turn changed to accommodate the new circumstances. in other words, monetary policy has been aimed at keeping inflation under control, which involves tightening when inflation exceeds the comfort level and loosening when it falls below. concluding remarks the current inflation scenario is a cause of concern, as the inflation rate persists well above the upper bound of the comfort zone. the fact that these inflationary pressures emerged rather quickly in a situation in which the economy was just beginning to recover from the significant slowdown of 2008 – 09 made the policy challenge more complicated. the monetary policy response to these pressures has been a calibrated one, seeking a balance between sustaining the recovery and reining in inflation, while being mindful of the risks that still remain in the global environment. recent data suggest that the approach is working, with the economy set to grow at a reasonably healthy rate during the current year and the inflation rate beginning to decline, including, significantly, in the manufacturing sector, where inflation is seen as being most responsive to monetary actions. this approach must be viewed in the context of a long - standing policy commitment to maintain a balance between growth and inflation in the short run, while fostering faster growth with lower inflation over long periods of time. the growth pattern of the indian economy over the past six decades clearly shows that accelerating growth has been accompanied by declining inflation. this is primarily because growth has been driven by expanding capacities across the board as well as, in recent years, by increasing global linkages. both these factors have helped to achieve a strong supply response to growing demand, thus keeping inflation in check. this is not to say that the indian economy is now invulnerable to inflation shocks. food and energy price shocks have been a regular part of the economic landscape and may continue to be so in the future. food prices, in particular, are now being driven by some structural imbalances between demand and supply, as increasingly affluent consumers diversify their dietary patterns away from cereals and towards protein sources. this calls for an effort to quickly increase the availability of these items, on which is contingent the longer term outlook for food price inflation. however