The ability of monetary authorities to extract seignorage was severely limited, and this is a partial justification of the high inflation rates. At the same time, monetary management became more difficult, as small shocks had a disproportionately big impact on inflation and the exchange rate.
Accordingly, we have proposed to exempt two categories of NBFCs from registration – one, all non-deposit taking NBFCs with asset size below ₹ 0.25 billion and two, NBFCs with asset size below ₹ 5 billion and not accessing public funds. These NBFCs would also be exempt from regulation.