Shadow Banking refers to financial activities and institutions that provide banking-like services but are not regulated like traditional banks.
Shadow Banking includes entities that lend money, provide credit, or facilitate financial transactions without being fully regulated as banks.
Examples include NBFCs, hedge funds, money market funds, and peer-to-peer lenders. These institutions play a crucial role in providing credit to sectors that traditional banks may not serve efficiently.
In India, many shadow banking activities (especially NBFCs) are supervised by the Reserve Bank of India, though not as strictly as banks.
"An NBFC providing loans to small businesses without being a full-fledged bank is part of shadow banking."