What is ‘Shadow Banking’?

(A) Outsourcing of banking work by a bank
(B) Financial transactions and other activities of non-banking financial intermediary
(C) Domestic banks’ foreign operations
(D) Foreign bank operating in another country for banking and other activities

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Correct Answer : Financial transactions and other activities of non-banking financial intermediary
Question Asked : UP PCS Review Officer/Asst. Review Officer (Pre) Exam, 2014
The shadow banking system is a term for the collection of non-bank financial intermediaries that provide services similar to tradi-tional commercial banks. Shadow banking, as usually defined, comprises a diverse set of institution's and markets that, collectively, carry out traditional banking functions, but do so outside, or in ways only loosely linked to, the traditional system of regulated depository institutions.
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