Policing NBFCs

SCAMS and frauds have their uses; they make the bureaucracy wake up to the need for more vigorous regulation, control and supervision, After the Harshad Mchta scam of 1992 were established the Board for Financial Supervision as well as a separate Department of Supervision (DOS) in the Reserve Bank of India. The DOS took over supervision of the all-India financial institutions and the non- banking financial companies (NBFCs), apart from commercial banks. The new prudential supervisory system introduced by the DOS in September 1995 is comprehensive, but except for some facts about capital adequacy ratios and non- performing assets of the major banks, little information on how the new system is working has been made public, unlike in, say, the UK where an annual statutory report on the working of the supervisory system is published by the Bank of England.