The rapid expansion of financial services, both in terms of volumes and variety have, as it is, posed a challenge for financial stability. This is made all the more difficult by the organisational dimension which perhaps provides scope for regulatory arbitrage.
While this could appear beneficial to the organisation in the short run, it only hightens systemic risk that in turn exposes the institution to externalities which have a cost. There has been entry of some banks into other financial segments like merchant banking, insurance and several new players have emerged who have a diversified presence across major segments of financial sector.