In India, we have always maintained that Non Banking Finance Companies (NBFCs), 1 a significant segment of shadow banking system, play a crucial role in broadening access to financial services, and enhancing competition and diversification of the financial sector.
While NBFCs are, sometimes, seen as akin to banks in terms of the products and services offered, this comparison is strictly not accurate, as more often NBFCs play a range of roles that complement banks. They have carved out niche areas of businesses, such as auto financing, which enables them to address specific needs of the people more efficiently.