*  *  *  Assistance provided by Shri SM Pillai and Shri Raj Rajesh is gratefully acknowledged. What is shadow banking? 1. Shadow banking is a universal phenomenon, although it takes on different forms.
In advanced economies where the financial system is more matured, the form of shadow banking is more of risk transformation through securitization; while in the economically backward economies where financial market is still in a developing stage, the activities are more of supplementary to banking activities.