Topic Details (Notes format)

Shadow Banking and NBFC Sector

Subject: Economics

Book: Comprehensive Indian Economy - Additional Topics

Non-banking financial companies (NBFCs) offer credit outside traditional banking channels—supporting SMEs, vehicle loans, and consumer finance. However, unbridled growth risks liquidity mismatches and defaults. The IL&FS crisis highlighted the need for tighter RBI oversight on asset-liability management. Exams focus on how NBFC expansions complement banks yet require prudent regulation to prevent systemic shocks and ensure depositors’ protection.

Practice Questions

Which of the following is an example of a capital receipt for the government?

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What is “open market operations” (OMO)?

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What is the main function of the Reserve Bank of India (RBI)?

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What is the significance of “Purchasing Power Parity” (PPP)?

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Which of the following is NOT an example of a direct tax?

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Which organization is responsible for estimating India’s Gross Domestic Product (GDP)?

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What is meant by “marginal propensity to consume”?

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What is the main aim of the “Startup India” initiative?

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What is the meaning of "fiscal deficit"?

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What is the meaning of “dumping” in international trade?

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