The changing contours of private credit
The financial cycle is never eradicated, nor is financial instability ever really extinguished. On the contrary, financial risk moves like liquid mercury out of certain entities and into others. And increasingly credit-fuelled economies are especially prone toward credit crises. In many ways, regulation can be backward-looking, and thus can often be directed toward the last crisis. Over 17 years since the Global Financial Crisis (GFC), regulators maintain a keen focus containing banking crises; justifiably so, as the recent banking wobbles in the United States (US) in March 2023—and those which rippled across the Atlantic—demonstrate that risks are still inherent (and perhaps contagious) within the global financial system.
And yet, looking beyond the traditional banking system, potential vulnerabilities lurk within certain elements of the system of non-bank financial institutions (NBFIs). The late American economist, Hyman Minsky observed that strong medicine can have strong side effects. And one side effect of the regulation imposed upon globally systemic important banks (GSIBs) in the wake of the GFC has been for a swelling of assets under management (AUM) held by the NBFIs. As shown in Figure 1, since the GFC, the spread between the global AUM held by the shadow banks (NBFIs) and those held by the traditional banks has widened considerably. Accordingly, the Financial Stability Board (FSB) has been focused on 'strengthening the resilience' of the NBFIs on a global basis, given the lack of transparency and systemic stress testing within the industry.
This paper can be accessed here.
This paper is authored by Alexis A Crow, ORF, New Delhi.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
First Post
an hour ago
- First Post
West Asia on the boil: The strategic fallout of Israel-Iran clashes
The US and Israel's collaboration in dismantling Iranian nuclear facilities through the use of critical and cutting-edge technology from the air has inflicted considerable damage on Iran read more This handout satellite image provided by Maxar Technologies and dated June 29, 2025 shows a view of tunnel entrances at the Fordo (Fordow) Fuel Enrichment Plant complex, about 30 kilometres north of Qom in central Iran. AFP The recent attack and counter-attack between Israel and Iran have widened the scope of the conflict in West Asia. The long-simmering tension between them conflagrated into a condition that bordered on a full-blown war. The US and Israel's collaboration in dismantling Iranian nuclear facilities through the use of critical and cutting-edge technology from the air has inflicted considerable damage on Iran. It is difficult to assess the scope and nature of the damage to the nuclear facilities in an authoritarian country, where everything is guarded closely and access to information is not a right. Iran's clandestine pursuit of nuclear enrichment in deep underground facilities makes it difficult to determine the gravity of damage. However, Iran threatens to attack American military bases in the region. Therefore, the recent hiatus is short-lived or a sort of preparation for something consequential in the near future. STORY CONTINUES BELOW THIS AD The cycle of violence has already begun, and it may intensify sooner or later to a different level. Every move has seen a countermove in the past. For instance, Israel's attack on Iran's nuclear and military sites coincided with the latter's attack on Tel Aviv and Haifa—critical areas from security, civilian, commercial, and defence perspectives. Israel's impregnable air defence system, known as Iron Dome, was penetrated by Iranian missiles, causing considerable damage. These developments sent shockwaves worldwide concerning their possible escalation and concomitant ramifications. The potential global economic consequences of a full-scale war—or even the persistence of the ongoing conflict—will have significant geopolitical implications for the region and beyond. To understand the character of the conflict, the following aspects assume salience: Geographical Non-Contiguity Israel and Iran do not share a common border. This geographical factor is a war-negative factor. Missile exchanges between the two countries are not new. Iran has disproportionately carried out air attacks on Israel in the past. Israel's Iron Dome has usually prevented destruction. Tel Aviv has consistently directed its efforts to thwart Iran's resolve to build a nuclear warhead. The former strikes the latter's nuclear facilities to prevent the completion and test-firing of a nuclear perceives an existential threat from Iran, which is determined to destroy Israel for ideological and religious reasons. Geography is a significant deterrent. Iran uses Iraqi and Jordanian airspace to attack Israel. Israel also uses Syrian and Iraqi airspace to carry out air offensives against Iran. Aerial war using other nations' airspace is untenable and expensive in the long run. Air defence and AI-based disabling technology may render missiles imprecise and erratic. Israel has reportedly taken control of Iranian airspace, posing an enormous challenge to Iranian air power. Sanctioned Iran and the Nuclear Issue Iran is the most sanctions-affected country in the world. International sanctions were imposed and expanded against Iran for obstinately pursuing its nuclear programme, creating regional disorder, and for its debilitating human rights record. These chronic sanctions have proven economically disastrous. Today, China is the largest importer of Iranian crude. Sanctions have affected Iran's crude exports to other countries. The barrage of sanctions has hit its economy. Funding proxies, uranium enrichment, and nuclear facilities have drained its resources. Domestic investment for progress and quality of life has shrunk abysmally. Tehran continues its nuclear programme despite sanctions. Its nuclear issue is the most pressing one in the region. Iran enriched uranium up to 60% purity, prompting Israel to allege that Tehran is closer to producing nuclear weapons. It launched 'Operation Rising Lion', attacking Isfahan, Natanz, and other Iranian nuclear facilities. Fordow, Iran's most fortified underground nuclear facility, has many centrifuges that remain immune to Israeli attack. STORY CONTINUES BELOW THIS AD However, several factors constrain Tehran's nuclear ambition. Iran, the P5, and Germany signed the Joint Comprehensive Plan of Action (JCPOA)/Iran nuclear deal in 2015, limiting uranium enrichment to 3.67 per cent, sufficient for electricity production. However, Trump withdrew from the deal in 2018, citing inherent weaknesses in the treaty. After the US withdrawal, Iran further enriched its uranium. Tehran maintains that it has every right to harness nuclear energy for peaceful purposes. This is just a statement, contradicting Iran's professed objective of Israel's destruction. On the other hand, International Atomic Energy Agency (IAEA) Director General Rafael Grossi, in a June 2025 address, said, 'Unless and until Iran assists the agency in resolving the outstanding safeguard issues, the agency will not be in a position to provide assurance that Iran's nuclear programme is exclusively peaceful.' The first round of Iran-US nuclear talks was held in Muscat in April 2025 with Oman's mediation. The sixth round of talks halted in the wake of the conflict. However, Iran has said it is ready for diplomacy with the US, provided Israel stops its aggression. STORY CONTINUES BELOW THIS AD Understanding the regional geopolitical dynamics of West Asia through the lens of structural realism, one can ask: Will Iran weaponise nuclear power to checkmate Israel and intensify anti-West proclivities? Be that as it may, Iran's ideological moorings and theological orthodoxy indicate the likelihood of using nuclear capacity for veto power and obstructionist politics. Ideological Antithesis Iran is ideologically anti-West. The Shia Islamism of Iran is an antithesis to Western liberalism, democracy, gender equality, and religious freedom. Israel is pro-West and pro-US. Iran does not acknowledge Israel as a state and treats it as an occupying power. There is a deep-seated ideological conflict between the two countries, proving Samuel Huntington's thesis of the 'clash of civilizations', which posits that cultural and religious identities will be the primary source of conflict in the post-Cold War world. This civilisational and ideological enmity, rooted in deep history, is unlikely to resolve quickly. The seeds of conflict rarely die—even after centuries. They lie dormant, waiting for conditions to re-emerge. The dust of conflict hardly settles despite the heavy cost it inflicts. Constructivists also see the Iran-Israel conflict through an ideological lens and find their antagonism deeply rooted. STORY CONTINUES BELOW THIS AD Iran's Proxy Warfare Iran has a well-developed proxy framework. It uses its proxies effectively to secure itself from direct confrontation with Israel and the US. Tehran employs such asymmetric warfare strategies through Hamas, Houthis, Hezbollah, and Kataib Hezbollah to counter the growing geopolitical and geostrategic weight of Israel and the USA. It disrupts peace in the region through proxies and promotes religious radicalism. The Israeli counter-offensive against Hamas and Hezbollah after the October 7 brutal episode has defanged their leadership. Top leaders among them include Hassan Nasrallah, Secretary-General of Hezbollah; Fuad Sukr, top commander of Hezbollah; Nabil Kaouk, Deputy Head of Hezbollah Central Council; Ismail Haniyeh, leader of Hamas; Mohammed Deif, Commander of the Military Wing of Hamas; and Ibrahim Aqil, Commander of the Radwan Force. The US has also gone against the Houthis, known for disrupting Red Sea trade. Iran is adept at grey warfare. It rarely confronts enemies directly but targets them through proxies. Since its proxies have been weakened by Israel's concerted attacks, Iran is now exposed to direct confrontation. STORY CONTINUES BELOW THIS AD Hegemony of the Islamic Revolutionary Guard Corps The Islamic Revolutionary Guard Corps (IRGC) dates back to the 1979 revolution. It is Iran's most powerful organisation, reporting directly to the Supreme Leader. It is anti-West and anti-Israel. Religious orthodoxy is its core value. It is reported that recent Israeli airstrikes eliminated top leadership, including Hossein Salami (Head of the IRGC), Gholami Rashid (Commander of Khatam al-Anbiya Central Headquarters), Amir Ali Hajizadeh (Commander of IRGC Aerospace Forces), and Esmail Qaani (Commander of Quds Force). Despite setbacks, the IRGC is a powerful organisation with political and economic hegemony in Iran. It can bypass the elected government and operates under the direct command of Supreme Leader Ali Khamenei (Velayat-e-Faqih). It has wings such as a ground force, Basij paramilitary, naval force (patrolling the Strait of Hormuz), air force (handling the missile programme), and cyber command (espionage and propaganda). It supports armed non-state actors to resist Western systems and views Israel as a perpetual enemy. STORY CONTINUES BELOW THIS AD Its proxies include Al-Ashtar Brigades in Bahrain; Kata'ib Hezbollah, Badr Organisation, Asa'ib Ahl al-Haq, Hezbollah Harakat al-Nujaba, and Kata'ib Sayyed al-Shuhada in Iraq; Hezbollah in Lebanon; Palestinian Islamic Jihad and Hamas in Palestine; Fatemiyoun Brigade, Zainabiyoun Brigade, Quwat al-Ridha, and Baqir Brigade in Syria; and the Houthis in Yemen. The Quds Force handles external missions while Basij suppresses domestic unrest. Regional Faultlines Turkey, Iran, and Saudi Arabia compete for Islamic leadership. Saudi Arabia is naturally positioned for this role due to its custodianship of Islam's two holiest sites—Mecca and Medina. Turkey and Iran promote Islamic causes to assert leadership despite Shia-Sunni divides. The Organisation of Islamic Cooperation (OIC) represents Islamic unity, yet tensions remain. The Iran-Saudi conflict is intensified by the Yemen war. Turkey, a NATO member, has its own regional vulnerabilities like Kurdish separatism and is unlikely to openly side with Iran. The UAE and Saudi Arabia have chosen a developmental path and avoid religious radicalism. They prioritise stability and trade, aligned with neoliberal and multipolar worldviews. Gulf Cooperation Council (GCC) states are diversifying their economies, investing globally, building infrastructure, and embracing AI. These states focus on delivering on their Vision Documents and maintaining regime security—hence, avoiding direct entanglement in conflicts. STORY CONTINUES BELOW THIS AD The American Strategy The US uses an offshore balancing strategy to check Iran's rise. It is Israel's unwavering ally, supporting it militarily to deter Iran's nuclear ambitions. Nuclear-armed Iran would destabilise the region and threaten Israel's existence. The US also supports GCC states—Saudi Arabia, UAE, Bahrain—against Iranian threats. It ensures energy security and free navigation in critical waterways like the Strait of Hormuz and Bab al-Mandeb. The US Central Command (CENTCOM) is headquartered in Bahrain, with bases in Kuwait (Camp Arifjan), UAE (Al Dhafra), Qatar (Al Udeid), Iraq (Erbil), etc., to deter geostrategic risks. The recent US-Israel joint strike against Iranian nuclear sites underscores this strategic resolve. If Iran retaliates against US assets, it may prompt further US strikes to eliminate Iran's nuclear capabilities. Tehran's defiance suggests an escalation is imminent. Russia's Position Russia may support Iran militarily or logistically, but not overtly. It could not intervene meaningfully in Syria after Assad's ousting—Assad now lives under Putin's protection in Moscow. Russia is too mired in its Ukraine war to engage elsewhere. War fatigue limits its options. Any support for Iran will be covert and material. China's Transactional Approach China may supply Iran with material and weapons. True to Sun Tzu's thinking, China avoids direct confrontation, especially on others' behalf. It excels in 'grey zone' warfare, preferring ambiguity. A transactional power, China prioritises its economic interests—particularly uninterrupted access to Iranian oil. While it may support Iran materially, it will do so discreetly, avoiding antagonism with Israel or the West. Jajati K Pattnaik is an Associate Professor at the Centre for West Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi. Chandan K Panda is an Assistant Professor at Rajiv Gandhi University (A Central University), Itanagar. The views expressed in the above piece are personal and solely those of the authors. They do not necessarily reflect Firstpost's views.
News18
2 hours ago
- News18
'Your System Is Infected': ED Busts Fake Call Centres In Chandigarh That Duped Foreign Nationals
Fake call centres and shell companies posed as global tech troubleshooters of companies like Microsoft, duping unsuspecting American and Canadian citizens with precision. Each time a foreign national dialed for tech assistance, the meter started ticking – 450 to 500 dollars siphoned off in the name of 'support." The Enforcement Directorate (ED) has unearthed a slick, sophisticated transnational scam that was running out of Chandigarh's Tricity, where a nexus of fake call centres and shell companies posed as global tech troubleshooters of companies like Microsoft and others, duping unsuspecting American and Canadian citizens with precision. Fronted by companies like FSAL Technologies Pvt Ltd, the syndicate baited victims through fake pop-up alerts like – 'Your system is infected," 'Call Microsoft Support Now". The pop-ups would only route them to Indian call centres posing as Microsoft, HP, or router support desks. Every call ended with a demand of 450 to 500 dollars for fixing a problem that did not exist. Victims paid, believing they were speaking to genuine tech agents. The money was routed via fake overseas firms like Bios Tech USA, controlled remotely by FSAL's director Faisal Rashid Peerzada, said a senior ED official Following raids across such illegal call centres, ED found no licenses, no agreements, and no real tech capacity. Just a set of trained fraudsters, and websites linked to spoofed domains like which is a knockoff of Geek Squad USA. The call centre staff, far from being software experts, lacked even basic BPO credentials, ED said in a statement. The operation was cloaked in layers. Locals like Faisal and others floated shell firms in the names of relatives and friends to obscure ownership. In one case, Bios Tech was run by a close associate Arshdeep, but all backend control, payment gateway access, and operations were handled directly from India. Another arm of the scam involved Sahu Jain, whose companies Terrasparq and Visionaire falsely claimed affiliation with CTS Mobility, a US-based firm supposedly owned by his sister Priya Jain. These entities also promised high-end services like device management and cybersecurity. In reality, they existed only to collect fraudulent payments, often recharging victims' cards repeatedly without consent, added the ED statement. Their websites projected glossy IT parks and professional setups. The ED found none of it existed as they used fake office photos, fake team bios, and fake promises of 24×7 support. view comments Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Mint
3 hours ago
- Mint
GIC Boosts Americas Exposure to 49%, Eyes AI Deals in US
(Bloomberg) -- Singapore's GIC Pte ramped up investments in the Americas while its Asia-Pacific holdings declined, as the giant sovereign wealth fund wagers that the US will benefit most from the artificial intelligence boom. North and South America accounted for 49% of GIC's assets as of March, up from 44% a year earlier. Asia-Pacific assets fell to 24% from 28%, according to the fund's annual report released Friday. Europe, the Middle East and Africa were unchanged at 20%. The shift comes as GIC expects a slowdown in the second half of the year alongside rising inflation and uncertainty driven by domestic and geopolitical pressures. The fund's annualized five-year return rose to 6.1% in nominal US dollar terms, up from 4.4% a year earlier. GIC doesn't publish yearly performance figures. 'The forces of change have clearly intensified and will be much harder to prepare for,' said Chief Executive Officer Lim Chow Kiat. He added in a letter accompanying the report that '2025 may be a turning point in markets — and in history.' GIC, which consulting firm Global SWF estimates has assets under management of $936 billion, is aiming to ramp up deals in artificial intelligence. Lim cited the technology — and AI's effect on US companies in particular — as a reason why some of its geographic holdings may change. Global SWF Managing Director Diego Lopez estimated that GIC's annual return was about 10.8%, which he said was 'good but not great.' The firm's 10-year annualized returns of 5% are slightly below average compared with the sovereign wealth funds it tracks, he said. 'It's also way below what a 60/40 traditional portfolio would've returned, which is 7.5% in this period of time,' Lopez said. 'The performance could be better.' GIC's AI investments in the US include Atlan, and Ramp, a financial operations firm in New York. 'The US is a huge market, continues to be very innovative, and trends like AI benefits the US the most,' because there are many American companies that can leverage the technology, Lim said in an interview. 'To the extent that the US is allowing us to deploy more capital, the percentages in other regions will become smaller.' Despite the shift away from Asia-Pacific, GIC still sees opportunities there. Group Chief Investment Officer Bryan Yeo said the fund expanded its investment team in Japan over the past year and continues to evaluate deals in India and China. GIC has also anchored several recent initial public offerings in Hong Kong as a cornerstone investor. 'Our base case is really lower growth and, on the margins, higher inflation,' Yeo added. 'We have to get over the higher valuations that we see in India — so it's always figuring out 'is the opportunity in India priced relative to its growth prospects?'' GIC reduced the level of detail it publishes about its investments. For the first time since it began issuing annual reports in 2008, the state-owned investor didn't provide the percentage of its total holdings in any specific country. Nor did it offer specifics on how much of its portfolio sits in developed versus emerging-market equities, private equity or real estate — which it provided in previous years. Instead, all holdings were categorized by what it labels as equities, fixed income or real assets. GIC said these represent exposure to growth, income and inflation, respectively. That means an asset like gold can sit in a variety of categories depending on how it's used. Inflation-linked bonds — which made up 7% of GIC's portfolio last year — sit within the real assets category alongside property, and not in fixed income. By these new measures, 'equities' rose to 51% of assets from 46% a year earlier, while 'fixed income' fell to 26% from 32% over the same period. 'Real assets' were largely flat at 23%. Within equities, the fund increased investments in the US, which remains its largest market by capital deployment. The reduced disclosure from the firm, which doesn't reveal the value of its assets, comes as countries around the world increase scrutiny of foreign investors amid rising populism and national security concerns. 'It's most important to present information in a way that allows you to have a good idea of what GIC's portfolio is like,' said Lim. 'We believe that we are providing sufficient information for the understanding of our stakeholders.' Lopez said the decrease in fixed income was likely due to the rising valuations of US 'Magnificent Seven' tech stocks and increased deployment in the private equity space across America. And the shrinking allocation to Asia-Pacific was probably from reductions in the value of assets in China and Japan, he added. But he said GIC's decision to provide much less granular detail on its investments made it hard to be certain, and that its actions matched a trend started by some sovereign wealth funds in the Middle East — which earlier this year similarly cut back on the amount of detail they disclose about their portfolios. 'This reduction in information is quite concerning,' said Lopez. He said the Singapore investor is a signatory member of the Santiago Principles, which advocate for transparency and good governance, yet 'they're becoming less and less transparent with time.' (Updates SWF's estimate of GIC's assets under management in the fifth paragraph, adds quotes and other details.) More stories like this are available on
