Non-banks and banks are interwoven, says ex-RBI official
Policy-makers should study connections between them when crafting regulations, argues Viral Acharya
Financial regulations should reflect the interconnectedness of banks and non-banks, a former senior official of the Reserve Bank of India has said.
In an interview with Central Banking, Viral Acharya, who served as the RBI’s deputy governor from 2017 to 2019, argues that risks associated with non-bank activities continue to exist within the banking system itself.
Drawing on his previous research, Acharya says non-banks get a significant amount of liquidity from the banking system. He cites
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