RBI's internal working group has recommended that large and well-run NBFCs can be converted into banks if they fulfill certain conditions.

"Well run large NBFCs, with an asset size of Rs 50,000 crore and above, including those which are owned by a corporate house, may be considered for conversion into banks subject to completion of 10 years of operations and meeting due diligence criteria and compliance with additional conditions specified in this regard," said the panel.

Bahram Vakil, Founding Partner of AZB & Partners believes that it’s a process of evolution for many NBFCs to convert into banks.

According to him, India needs a robust banking sector.

“India needs capital at every level. We are moving to USD 5 trillion economy mark. We need capital and we need strong robust banking sector, there is no question about that,” he added.

For entire interview, watch video