Regulation of Shadow Banking System in India - A Boon to Unbanked Sectors!

Abstract

Indian economy is in a shambles and it is apparent to the country that growth rate in GDP has slipped to 4.5 percent in the second quarter of the year 2019. This growth rate of 4.5% will take 9 more years to reach the target of USD 5 trillion economy. Shadow banking sector complements the banking sector and helps in the formation of cradle of entrepreneurship and fetching credit to unbanked segment of India. People are deprived of credit from banks or NBFCs due to lack of good credit score and it forms vicious cycle of poor lending and credit score. It is ironical that credit cannot be taken without a good credit score and credit score cannot be build without a credit. Economic reforms, innovation, growth and improvement of banking and shadow banking sector is desirable to achieve the target of USD 5 trillion economy by 2024-25.