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Based on which committee recommendations, RBI introduced a comprehensive regulatory framework for NBFC-MFIs?
Gadgil committee
Malegam committee
Kelkar committee
Rangarajan committee
Malegam committee
The Reserve Bank of India (RBI) established a dedicated category for Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) in 2011, following the recommendations of the Y.H. Malegam Committee. This committee was specifically constituted to address the microfinance crisis in Andhra Pradesh and suggest appropriate regulatory measures for the sector.
The Reserve Bank of India (RBI) established a dedicated category for Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) in 2011, following the recommendations of the Y.H. Malegam Committee. This committee was specifically constituted to address the microfinance crisis in Andhra Pradesh and suggest appropriate regulatory measures for the sector.
The RBI acts as the sole regulator for NBFCs under the Reserve Bank of India Act, 1934, specifically Section 45-IA which mandates registration for NBFCs.
The Malegam Committee was formed in 2010 to study issues in the microfinance sector.
RBI accepted the committee's recommendation to classify MFIs as a separate category of NBFCs.
The committee recommended a cap on the interest rate margin and loan processing fees to prevent the exploitation of rural borrowers.
The Malegam Committee suggested that loans provided by MFIs should be primarily for income-generating activities.
Gadgil Committee is known for its report on the Western Ghats ecology.
Kelkar Committee is famously associated with tax reforms (Direct and Indirect Tax) and PPP model implementation.
Rangarajan Committee is best known for its recommendations on poverty estimation and state-specific poverty lines.
B is correct тАФ The Y.H. Malegam Committee recommendations led the RBI to create a distinct regulatory category for NBFC-MFIs to ensure financial stability and protect borrowers.
When studying banking committees, distinguish between those regulating financial institutions (Malegam, Narasimham) and those focusing on fiscal policy or poverty (Kelkar, Rangarajan, Tendulkar) as these are frequent UPSC/SSC distinction questions.
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