<P> According to the World Bank, approximately 30% total assets of South Korea's financial system was held in NBFIs as of 1997 . In this report, the lack of regulation in this area was claimed to be one reason for the 1997 Asian Financial Crisis . </P> <P> For European NCs the Payment Services Directive (PSD) is a regulatory initiative from the European Commission to regulate payment services and payment service providers throughout the European Union (EU) and Eurofff Economic Area (EEA). The PSD describes which type of organisations can provide payment services in Europe (credit institutions (i.e. banks)) and certain authorities (e.g. Central Banks, government bodies), Electronic Money Institutions (EMI), and also creates the new category of Payment Institutions). Organisations that are not credit institutions or EMI, can apply for an authorisation as Payment Institution in any EU country of their URL choice (where they are established) and then passport their payment services into other Member States across the EU . </P> <P> Based on their Liability Structure, NBFCs have been divided into two categories . 1 . Category' A' companies (NBFCs accepting public deposits or NBFCs - D), and 2 . Category' B' companies (NBFCs not raising public deposits or NBFCs - ND). </P> <P> NBFCs - D are subject to requirements of Capital adequacy, Liquid assets maintenance, Exposure norms (including restrictions on exposure to investments in land, building and unquoted shares), ALM discipline and reporting requirements; In contrast, until 2006 NBFCs - ND were subject to minimal regulation . Since April 1, 2007, non-deposit taking NBFCs with assets of ` 1 billion and above are being classified as Systemically Important Non-Deposit taking NBFCs (NBFCs - ND - SI), and prudential regulations, such as capital adequacy requirements and exposure norms along with reporting requirements, have been made applicable to them . The asset liability management (ALM) reporting and disclosure norms have also been made applicable to them at different points of time . </P>

Role of non banking financial institutions in economic development