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

What is meant by “stagflation”?

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What is meant by the term “current account deficit”?

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Which term refers to the decrease in the value of a currency relative to foreign currencies?

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Which term refers to an economy that has elements of both capitalism and socialism?

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Which of the following measures can reduce a trade deficit?

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Which of the following is an example of a public sector undertaking (PSU) in India?

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What is “open market operations” (OMO)?

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What is the concept of “invisible hand” associated with?

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What is a “repo rate”?

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What is “inflation targeting”?

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