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 NOT part of the World Bank Group?

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What is “open market operations” (OMO)?

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What does the “Human Development Index” measure?

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What is the main objective of disinvestment in public sector undertakings (PSUs)?

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Which organization publishes the Human Development Index (HDI)?

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