Based on the recommendations of which Committee was the creation of a separate category for NBFCs operating in the microfinance sector (NBFC-MFI) done?
- A.Narasimhan Committee
- B.Malegam Committee
- C.Deepak Parekh Committee
- D.PK Mohanty Committee
Correct answer
Explanation
The correct answer is B, Malegam Committee. The Reserve Bank of India set up this sub committee of its Central Board under Y. H. Malegam in October 2010, after complaints of very high interest rates and harsh recovery in the microfinance business. Its report of January 2011 asked the RBI to treat microfinance lenders as a class of their own, and the RBI then created the NBFC-MFI category with rules on the share of qualifying assets, a ceiling on the borrower's income and loan size, and a cap on the margin and the interest rate. Option A is wrong because the Narasimham committees of 1991 and 1998 dealt with banking sector reform, capital adequacy and bad loans. Option C is wrong because the Deepak Parekh committee reported on financing infrastructure. Option D is wrong because the P. K. Mohanty working group of 2020 examined ownership and corporate structure of private banks. Exam tip: Malegam means microfinance, Narasimham means banking reforms.
Practice Questions
View allWhich of the following is/are credit rating agency/agencies in India?
- A.CRISIL
- B.CARE
- C.ICRA
- D.All of the above
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CRISIL, CARE and ICRA are all credit rating agencies registered with SEBI, which regulates such agencies under its Credit Rating Agencies Regulations of 1999.
Read the full explanation →Which of the following statements about the India Post Payments Bank (IPPB) is/are correct? 1. It has been incorporated as a Public Limited Company. 2. It started its operation by establishing two pilot branches at Hyderabad and Varanasi. Select the correct answer using the code given below.
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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IPPB was incorporated as a public limited company, but its two pilot branches opened at Raipur and Ranchi, not at Hyderabad and Varanasi.
Read the full explanation →Consider the following statements : 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country. 2. NPCI has launched RuPay, a card payment scheme. Which of the statements given above is/are correct ?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The National Payments Corporation of India was set up in 2008 as the umbrella body for retail payments in the country, on the initiative of the Reserve Bank of India and the Indian Banks' Association, under the Payment and Settlement Systems Act, 2007.
Read the full explanation →Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India : 1. NBFCs cannot accept demand deposits. 2. All the NBFCs operating in India have to be registered with the RBI. 3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself. 4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs. Which of the statements given above is/are correct ?
- A.1 and 4
- B.1, 2 and 3
- C.4 only
- D.2, 3 and 4
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These are two of the three ways the RBI itself says an NBFC differs from a bank. An NBFC lends and invests like a bank, but it cannot accept demand deposits such as savings or current accounts, so statement 1 is correct.
Read the full explanation →Which of the following is not included in the assets of a commercial bank in India?
- A.Advances
- B.Deposits
- C.Investments
- D.Money at call and short notice
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Deposits are money the bank owes to its customers, so they sit on the liabilities side of its balance sheet.
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