Directions: Read the passage carefully and answer the question that follows.

Non-banking financial companies, commonly called NBFCs, have become a significant part of India’s financial landscape. Although many such private institutions existed for decades, the Reserve Bank of India formally brought them within its regulatory framework in the 1960s. Their combined assets have expanded steadily and now represent a notable share of the country’s economic output.

NBFCs provide several credit-related services without holding a conventional banking licence. They often serve customers and sectors that may receive limited attention from banks, including vehicle purchasers, small agricultural borrowers, and people seeking loans against jewellery. Their specialised products, broad local presence, relatively quick approvals, and flexible lending practices allow them to supplement the formal banking network while also competing with it in selected areas.

For these reasons, NBFCs are frequently described as part of the shadow-banking system: they perform financial intermediation outside the routine structure through which commercial banks operate. This arrangement can improve access to finance, but it can also create risk. A major default by a large finance firm may disrupt the flow of funds to other NBFCs, making banks reluctant to lend and placing pressure on the wider financial system. Unlike scheduled banks, these firms may not receive direct central-bank assistance during a liquidity crisis. Consequently, research on this segment remains comparatively limited.

Which option is closest in meaning to “developing” in the context of the financial sector described in the passage?