As pointed out in the FSR (June 2011), differences in regulations for NBFCs vis-a-vis banks and between NBFCs under the purview of different regulators add to the scope for regulatory arbitrage. There are gaps and weaknesses in the regulatory perimeter-wealth management activities, structured products, hedge funds, private equity funds etc., need to be addressed.
Moreover, while seeking to correct the problems which result from the mixing of trading with deposit banking, we wanted to preserve the universal banking model at group level. Hence, we allowed the separated entities to operate under the same roof. This would keep the trading units within the supervisory umbrella of the bank supervisors.