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

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

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What is the “law of diminishing marginal utility”?

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Which of the following is an example of a public sector undertaking (PSU) in India?

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What is meant by “stagflation”?

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Which organization publishes the Human Development Index (HDI)?

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What is meant by “structural unemployment”?

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

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Which of the following best describes “capital formation”?

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What is “fiscal stimulus”?

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What is meant by “crowding out” in economics?

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