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

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Which of the following is a feature of a command economy?

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Which of the following is an example of a renewable resource?

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What does the “Human Development Index” measure?

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What is meant by “stagflation”?

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What is the term for goods that are used together, such as cars and fuel?

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Which of the following is NOT a function of the World Trade Organization (WTO)?

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What is a “repo rate”?

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What is the primary role of the Securities and Exchange Board of India (SEBI)?

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What is the “law of diminishing marginal utility”?

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