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 a characteristic of “perfect competition”?

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What does the “Phillips Curve” show?

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What is the Phillips Curve?

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

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What is meant by “crowding out” in economics?

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What is the main aim of Public Distribution System (PDS) in India?

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What is the “law of diminishing marginal utility”?

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What is “inclusive growth”?

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

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What is “inflation targeting”?

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