About a third of the funds borrowed by Indians reach them through para banks, which reach the hinterland or the marginal customer where formal commercial banking hasn’t. This ability to bring formal finance to the doorstep of the unbanked has driven the growth at nonbanking finance companies (NBFC), but 2019 could well alter the operating environment for many of them. To begin with, NBFCs would have to put up with higher funding costs. The mismatch between long-term lending and borrowings will have to be addressed. The Reserve Bank of India has talked about strengthening the regulatory vigil on the sector in general and on asset liability management (ALM) framework in its latest report. NBFCs would like to focus on direct assignment to ensure that risk is not on their balance sheet but they are able to raise fee income to maintain return on equity. NBFCs will have to diversify their borrowing profile from mostly debentures, commercial papers and banks to include instruments like external commercial borrowing, masala bonds and expand the number of banks.