Non-Banking Financial Companies (NBFCs) play a pivotal role in the financial ecosystem by providing credit and financial services to underserved segments. However, their rapid growth has raised concerns about systemic risks, necessitating robust regulatory frameworks. This paper examines the regulatory environment governing NBFCs, focusing on global and Indian perspectives, and identifies key challenges such as compliance costs, regulatory arbitrage, and technological disruptions. Through a review of recent literature and case studies, the study highlights the complexities of regulating NBFCs in a dynamic financial landscape. It proposes policy recommendations to balance financial stability, consumer protection, and innovation. The findings underscore the need for adaptive regulations, enhanced supervisory oversight, and collaboration between regulators and NBFCs to foster sustainable growth.
Dr. D. S. Borkar (Sun,) studied this question.