Economics • Banking & FinanceMedium
Which institution regulates microfinance institutions (MFIs) and non-banking financial companies (NBFCs) structured as societies or trusts in India?
A. Securities and Exchange Board of India
B. Reserve Bank of India✓ Correct Answer
C. National Bank for Agriculture and Rural Development
D. Small Industries Development Bank of India
💡 Solution & Explanation
The Reserve Bank of India serves as the primary regulatory and supervisory authority for Non-Banking Financial Companies and microfinance institutions operating across India. While NABARD provides developmental refinancing and promotional support to rural institutions, direct statutory regulation of NBFCs rests with the central bank under the Reserve Bank of India Act, 1934. Recent regulatory frameworks have tightened governance norms for these entities to protect retail borrowers.
More Economics Banking & Finance questions
- What is the primary purpose of the Statutory Liquidity Ratio that scheduled commercial banks are mandated to…
- What does the term 'Prompt Corrective Action (PCA)' framework implemented by the RBI entail for weak banks?
- What does the term 'Prompt Corrective Action (PCA)' framework for banks specifically trigger when capital or…
- What is a 'Letter of Credit' primarily used for in international trade?
- What is the primary function of the 'National Bank for Agriculture and Rural Development (NABARD)'?