Why did the Reserve Bank of India (RBI) impose business restrictions on four non-banking finance companies (NBFCs), including Asirvad Micro Finance Ltd and Navi Finserv Ltd (in October 2024)?

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1. The Reserve Bank of India (RBI) periodically monitors the financial health and regulatory compliance of Non-Banking Financial Companies (NBFCs).

2. In October 2024, RBI imposed business restrictions on four NBFCs, including Asirvad Micro Finance Ltd and Navi Finserv Ltd.

3. The primary reason for these restrictions was the **high levels of non-performing assets (NPAs)** held by these NBFCs, which indicated poor asset quality and increased credit risk.

4. High NPAs affect the liquidity and solvency of NBFCs, prompting RBI to intervene to protect depositors and maintain financial stability.

5. Other options like non-compliance with loan recovery, excessive interest rates, failure to maintain capital reserves, or anti-money laundering violations were not cited as the primary reasons in this case.

**Answer:** High levels of non-performing assets (NPAs)

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