It is estimated that around  70% of a local shock is smoothed in this way. [6] Public insurance works through similar principles. The Federal Deposit Insurance Corporation (FDIC) allows banks in different states to insure each other against failure, backstopped by a credit line from the US Treasury. The federal budget complements the state-level automatic stabilisers, smoothing a further 10% of shocks.
Second, considering the recent turmoil some NBFCs had to face because of  liquidity stress, the criticality of sound liquidity risk management by NBFCs has been reinforced with the introduction of the liquidity risk management framework for NBFCs with asset size above Rs.100 crore. All NBFCs, irrespective of size are encouraged to follow the framework.