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Name : Anupam
Subject: Capital Adequacy for NBFC's
Message : Capital adequacy ratio (CAR) is imporatant for NBFCs bcoz of the following:

1. Many NBFCs raise deposits from Investors similar to a Bank but with greater risk of non performance and default.

2. NBFCs have lower trust quotient as compared to a regular Bank.

3. NBFCs have the option; if permitted by RBI to transform themsleves to a Bank.

However Groups that have exclusive concentration in Banking and Finance will be allowed to enter Banking. Others like Tatas cannot enter Banking because of violation of Conflict of interest norms in banking industry(wrt creation of loan/asset portfolio).


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