It is important to distinguish between policy that acts in the short term, and is intended to moderate economic fluctuations – which economists call “the business cycle” – and policy that is geared toward achieving long terms goals. In the short term, policy makers use monetary policy and fiscal policy.
Innovative solutions like SHG bank linkage, branchless banking have been adopted after careful assessment of risks to the banks as also to customers. The preference has been to restrict deposit taking to banks and non-bank financial companies are encouraged to focus on innovative approaches to lending under a lighter regulatory framework, with additional regulations for systemically important NBFCs entities.