Finance · Development Financial Institutions
A regulator is evaluating various entities for their potential role as systemically important financial institutions (SIFIs). A specific organization, SIDBI (Small Industries Development Bank of India), is being assessed. Which of the following describes the status of SIDBI, and what is its primary economic function?
- 1Status: SIDBI is a Non-Banking Financial Company (NBFC) with a CRA license. Primary Economic Function: Issuing short-term commercial papers.
- 2Status: SIDBI is an All India Financial Institution (AIFI) / Development Financial Institution (DFI) regulated by the RBI. Primary Economic Function: Promoting and financing the Micro, Small, and Medium Enterprises (MSME) sector through refinancing and direct lending.✓
- 3Status: SIDBI is a Specialized Intermediary of the RBI. Primary Economic Function: Acting as a Banker to the Government for State governments.
- 4Status: SIDBI is a SEBI-registered Credit Rating Agency. Primary Economic Function: Providing direct infrastructure project financing.
Correct answer
Status: SIDBI is an All India Financial Institution (AIFI) / Development Financial Institution (DFI) regulated by the RBI. Primary Economic Function: Promoting and financing the Micro, Small, and Medium Enterprises (MSME) sector through refinancing and direct lending.
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