| Which of the following are true about 'Shadow Banking' in India? |
| 1. It is performed by non- banking entities |
| 2. It broadens access to financial services |
| 3. It enhances competition and, |
| 4. It brings diversification in financial sector. |
| Which of the statements given above is/are correct? |
A) 1, 2 and 3 only
B) 2, 3 and 4 only
C) 1 and 4 only
D) 1, 2, 3 and 4
Correct Answer: D
Solution :
[d] The shadow banks in India (i.e. the NBFCs) are of a different type; they have been under regulation for-more than 50 years; they subserve the economy by playing a complimentary and supplementary role to mainstream banks and also in furthering financial inclusion. Yet, they do pose dangers, but of different variety; it primarily relates to consumer protection. It is the constant endeavour of Reserve Bank to enable prudential growth of the sector, keeping in view the multiple objectives of financial stability, consumer and depositor protection, and need for more players in the financial market, addressing regulatory arbitrage concerns while not forgetting the uniqueness of NBFC sector.
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