India's non-banking financial sector grew by 10%; declined globally by 3 %

The non-banking financial institutions are typically those that do not possess a full banking license and thus, cannot accept public deposits. These entities usually focus on lending and financing activities.

"Globally, the size of the non-bank financial intermediation (NBFI) sector declined by 3 per cent in 2022, which is the first notable decrease since. However, Economic Function 2 (EF2) entities i.e., entities undertaking lending activities, which are akin to NBFCs in India, exhibited a growth of around 10 per cent which is the highest among all five economic categories of the NBFI sector" said the report.

The report highlighted India as the third-largest entities in the non-banking financial sector, following the United States and the United Kingdom. Over the past decade, the Indian banking system has demonstrated remarkable resilience, overcoming numerous challenges posed by both domestic and international economic environments.

The report said that the improvement in asset quality and the strong macroeconomic fundamentals have played a crucial role in improving the Indian banking sector.

It highlighted that the Indian government and regulatory bodies have focused on creating a level playing field for financial institutions. This has involved initiatives such as the creation of strong banks through mergers and capital infusion, improving governance practices, expanding the reach and quality of financial services, and enhancing the adoption of digital banking.

During the pandemic, the government maintained the financial sector's stability through substantial capital and liquidity buffers. This resilience is credited to the proactive measures taken by the Reserve Bank of India (RBI).

The report also highlighted RBI's efforts in strengthening the financial system included enforcing the regulatory measures that ensured the sector remained well-cushioned against economic shocks. These measures have not only helped in maintaining stability but also in fostering growth and innovation within the sector.

Recently India's digital banking landscape has also seen significant advancements. The push towards digital banking has been a major contributor to the sector's growth. This transition to digital platforms has expanded access to financial services, making them more inclusive and efficient.

Moreover, the report said that the government and regulatory bodies have prioritized customer protection, ensuring that the interests of the public are safeguarded amidst the digital transformation. (ANI)