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RBI is likely  to  propose  stricter  rules for shadow banks

The RBI is expected to propose strict rules on “shadow banks” in a bid to strengthen the solvency and sustainability of a sector that has been showing signs of stress in recent years.

It is expected to set out proposals that required bigger shadow banks to maintain a statutory liquidity ratio. RBI could also suggest large non-banks be required to maintain a cash reserve ratio.

The move could be a huge cash drain for the sector which is currently free from maintaining these reserve ratios, allowing them to lend to subprime lenders as well.

Source: Reuters


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