Who is the regulatory authority of Micro Financial Companies (a type of Non- banking financial companies) in India?

Correct option is A

(a) Reserve Bank of India

Sol.Microfinance Institutions (MFIs) are regulated by the Reserve Bank of India (RBI). MFIs provide small loans (microloans) to low-income groups who lack access to traditional banking services. RBI issues guidelines on interest rates, repayment structures, and fair lending practices.

Information Booster:

• Microfinance loans are typically unsecured, meaning no collateral is required.
• Self-Help Groups (SHGs) and Joint Liability Groups (JLGs) often use microfinance.
• NABARD promotes microfinance but does not regulate it.
• Important MFIs in India: SKS Microfinance, Bandhan Bank, Ujjivan.
• Major schemes:Pradhan Mantri Mudra Yojana (PMMY).

Additional Information:

• (b) National Housing Bank (NHB) → Regulates housing finance institutions, not MFIs.
• (c) Department of Company Affairs → Governs corporate laws, not financial regulation.
• (d) SEBI → Regulates securities market but not MFIs.