130 rbi was established in 1934 with the passing of

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130RBI was established in 1934 with thepassing of the Reserve Bank of India Act, 1934 and presently maintains the largest regulatoryscope and power in the banking sector.131It should, however, be emphasized that this landscape has changed significantly in the lastfew years due to the evolution of financial technologies in conjunction with the liberalizationof the financial system. Banks have traditionally been the dominant financial intermediary,122India Stack – The Bedrock of a Digital India (2016, December 7). Retrieved from http://indiastack.org/india-stack-the-bedrock-of-a-digital-india/.123Section 5(1)(b) of the Banking Regulation Act 1949.124Machiraju, H.R. Indian Financial System (2010, October 1).125Section 5(1)(c) of the Banking Regulation Act 1949.126Machiraju, H.R. Indian Financial System (2010, October 1).127Scheduled banks are those that have been included in the Second Schedule of the ReserveBank of India Act, 1934 and fulfill certain capital and corporation requirements. Banks that are notincluded in the Second Schedule of the Reserve Bank of India Act are considered non-scheduled banks.See also, Parameswaran, R. Indian Banking (2001).128Topic-wise Solved Papers for IBPS/ SBI Bank PO/ Clerk Prelim & Mains By Disha Experts.129Topic-wise Solved Papers for IBPS/ SBI Bank PO/ Clerk Prelim & Mains By Disha Experts.130Machiraju, H.R. Indian Financial System (2010, October 1).131Reserve Bank of India: Functions and Working. Retrieved from rdocs/Content/PDFs/FUNCWWE080910.pdf
15WORKING DRAFTbut the landscape has seen the rapid rise of alternative payment and banking services, aswell as fintech startups focused on offering financial services. The growth of e-commercein India has seen the emergence of digital financial services and intermediaries that arerapidly gaining traction among the Indian public. This growth, in conjunction with the redtape associated with “traditional” banks’ has seen their market share for payments and loanse decline as a result. Non-banking finance companies (NBFCs) contribution to the Indianeconomy has increased from 8.4 percent in 2006 to more than 14 percent in the March of2015 and their continued growth is projected.132Furthermore, in order to facilitate financialinclusion, RBI “had created a framework for licensing Payments Banks/Small Banks and otherdifferentiated banks”.133The beginning of NBFCs in India can formally be traced back to the 1964, where ChapterIII B of the RBI Act, 1934 was “introduced to regulate deposit-accepting NBFCs”.134In 1996and 1997, the RBI developed a more “enhanced framework”, including “introduction ofentry point norms, stricter and more detailed regulations with respect to acceptance ofdeposits”, “maintenance of a portion of deposits in liquid assets, creation of a reserve fund,etc”.

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Term
Fall
Professor
Maam Farah Zameer
Tags
Passing, Financial services

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