Of the total financial sector assets, insurance companies account for barely 3%, mutual funds 3% (and are largely sponsored by banks) while other non-bank finance companies (NBFCs) are 2% of the system and holders of listed private bonds are less than 1%. Furthermore, NBFCs are fragmented and weakly capitalized.
For financial sector stability, it is critical that such institutions be better capitalized and a conducive environment is created for the growth of promising segments (collective investment schemes, including mutual funds), niche markets and products are introduced for leasing companies, modarabas, housing finance and venture capital, and penetration is enhanced in the insurance industry.