With reference to the regulatory framework for the non-banking finance companiesandrsquo; (NBFC) by RBI, consider the following statements:1. The regulatory and supervisory framework of NBFCs will be based on a four-layered structure andmdash; the base layer (NBFC-BL), middle layer (NBFC-ML), upper layer (NBFC-UL) and the top layer.2. The current threshold for systemic importance, which is 500 crore now, is proposed to be revised to 1,000 crore.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?

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With reference to the regulatory framework for the non-banking finance companies’ (NBFC) by RBI, consider the following statements:
1. The regulatory and supervisory framework of NBFCs will be based on a four-layered structure — the base layer (NBFC-BL), middle layer (NBFC-ML), upper layer (NBFC-UL) and the top layer.
2. The current threshold for systemic importance, which is ₹500 crore now, is proposed to be revised to ₹1,000 crore.

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

Correct answer is option 'C'. Can you explain this answer?

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Daily Current Affairs MCQ - January 24, 2021

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With reference to the regulatory framework for the non-banking finance...

The Reserve Bank of India (RBI) has suggested a tougher regulatory framework for the non-banking finance companies’ (NBFC) sector to prevent recurrence of any systemic risk to the country’s financial system.

RBI released a discussion paper on the revised regulatory framework which is formulated on a scale-based approach, and sought comments within a month.
The regulatory and supervisory framework of NBFCs will be based on a four-layered structure — the base layer (NBFC-BL), middle layer (NBFC-ML), upper layer (NBFC-UL) and the top layer.
If the framework is visualised as a pyramid, the bottom of the pyramid, where least regulatory intervention is warranted, can consist of NBFCs currently classified as non-systemically important NBFCs (NBFC-ND), NBFCP2P lending platforms, NBFCAA, NOFHC and Type I NBFCs.
Moving up, the next layer may comprise NBFCs currently classified as systemically important NBFCs (NBFC-ND-SI), deposit-taking NBFCs (NBFC-D), HFCs, IFCs, IDFs, SPDs and CICs.
The extant regulatory framework for NBFC-NDs will now be applicable to base layer NBFCs, while the extant regulatory framework applicable for NBFC-NDSI will be applicable to middle layer NBFCs. NBFCs residing in the upper layer will constitute a new category.
The revisions applicable to lower layers of NBFCs will automatically be applicable to NBFCs in the higher layers, unless there is a conflict or otherwise stated.
The current threshold for systemic importance, which is ₹500 crore now, is proposed to be revised to ₹1,000 crore.
As per the proposals, the extant NPA classification norm of 180 days will be reduced to 90 days.

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With reference to the regulatory framework for the non-banking finance companies’ (NBFC) by RBI, consider the following statements:1. The regulatory and supervisory framework of NBFCs will be based on a four-layered structure — the base layer (NBFC-BL), middle layer (NBFC-ML), upper layer (NBFC-UL) and the top layer.2. The current threshold for systemic importance, which is 500 crore now, is proposed to be revised to 1,000 crore.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?

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