Shadow Credit refers to lending activities that take place outside the traditional banking system, typically by non-bank financial institutions or informal channels.
Shadow Credit is part of the broader shadow banking system, where entities provide loans without being fully regulated like banks. These include NBFCs, fintech lenders, peer-to-peer platforms, and informal lenders.
In India, many such entities—especially NBFCs—are regulated to some extent by the Reserve Bank of India, but informal credit channels may operate with limited oversight.
"A small business unable to get a bank loan borrows from an NBFC or a fintech lending platform—this is shadow credit."