Economic Affairs secretary SC Garg has blamed lack of real-time data for the ongoing crisis in the shadow banking sector. He was speaking at a CII summit on Saturday (5 January), reports Live Mint.
Calling for proper regulations to keep the banking sector in order, he said the government was working with the RBI to create a system for information about the NBFC (Non-banking financial company) sector.
The liquidity crisis in the NBFC major, IL&FS (Infrastructure Leasing & Financial Services) last August, has put the entire financial sector in a crisis. Primarily relating to liquidity, many are calling it a crisis of confidence rather than anything fundamental.
The IL&FS defaults led to other major NBFCs like DHFL and Indiabulls witnessing a massive fall in their stocks.
“The IL&FS crisis shows that there are lots of gaps not only in terms of regulations but also in data collection, information, interaction with the government or the regulators. Today, we don’t even know who to talk to in the NBFCs and there are no organisations that represent them,” Garg said.
He called for proper regulations for development of NBFCs, however, deriding any regulation that chokes growth. Garg added that the regulations must serve not only the needs of NBFCs and investors but also borrowers , thus leading to overall financial stability.
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