Which regulatory body in India oversees and supervises microfinance institutions (MFIs) to ensure their compliance with regulations?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. Reserve Bank of India (RBI).
In India, the Reserve Bank of India (RBI) oversees and supervises microfinance institutions (MFIs) to ensure their compliance with regulations. As the central regulatory authority, the RBI issues guidelines for MFIs under the Master Directions for Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) framework. It monitors their operations to ensure fair practices, transparency, and borrower protection. The RBI’s regulation ensures that MFIs maintain financial discipline, prevent over-indebtedness of borrowers, and contribute effectively to financial inclusion by serving low-income groups.