Statement I: Apart from issuing currency notes, RBI regulates all commercial banks in India.
Statement II: Regulating NBFCs are not under the purview of RBI.
In the light of the above Statements, choose the most appropriate answer from the options given below:
(A) Both Statement I and Statement II are correct
(B) Both Statement I and Statement II are incorrect
(C) Statement I is correct and Statement II is incorrect
(D) Statement I is incorrect and Statement II is correct
The correct answer is (C) Statement I is correct and Statement II is incorrect.
Explanation 🏦
Statement I: Apart from issuing currency notes, RBI regulates all commercial banks in India. (Correct)
This is a correct statement. Under the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) is the central banking institution that acts as the primary regulator and supervisor of all commercial banks in India. This includes public sector banks, private sector banks, and foreign banks. Its regulatory functions are crucial for maintaining the stability and public confidence in the financial system.
Statement II: Regulating NBFCs are not under the purview of RBI. (Incorrect)
This statement is false. The RBI has extensive powers to regulate Non-Banking Financial Companies (NBFCs) under the RBI Act, 1934. The RBI is responsible for the registration, policy formulation, and supervision of most NBFCs. While certain specific types of NBFCs are regulated by other bodies (like housing finance companies by the National Housing Bank), the RBI is the primary regulator for the sector as a whole.