The RBI is expected to set out proposals in a discussion paper next week, recommending that bigger shadow banks maintain a statutory liquidity ratio, the sources said.
India’s central bank is likely to propose tightening rules on “shadow banks” in a bid to strengthen solvency and sustainability of a sector that has been showing signs of stress in recent years, two sources said.
The Reserve Bank of India has been trying to tighten regulatory norms on the sector since Infrastructure Leasing &Financial Services, the largest non-bank financial company, went bankrupt in 2018, and Dewan Housing Finance Corp. and Altico Capital defaulted on payments in 2019.
The RBI is expected to set out proposals in a discussion paper next week, recommending that bigger shadow banks maintain a statutory liquidity ratio, the sources said.
The officials asked not to be named as the discussions on the proposals are not public.
India’s banks must maintain at least 18% worth of deposits that they…