NABARD's role in priority sector monitoring arises from RBI circulars because NABARD has a comparative advantage in:

A large Non-Banking Financial Company (NBFC) specializing in micro-credit has seen exponential growth over the last 5 years. With an asset size now exceeding 50,000 Crore and a customer base of 10 million, the management is considering applying for a conversion into a Small Finance Bank (SFB). The move is motivated by the desire to access low-cost public deposits and provide a wider range of financial products. However, the transition involves significant regulatory hurdles, including a change in the capital structure and compliance with stringent priority sector lending (PSL) norms. Which of the following is the most significant operational change the NBFC will face immediately upon its conversion into an SFB?

Capital adequacy norms are central to the stability of banks because they require institutions to maintain sufficient capital relative to risk-weighted exposures. The main policy objective of capital adequacy is to: