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    Question

    Which of the following is one of the major differences

    between an NBFC & a Bank?
    A NBFC cannot accept demand deposits Correct Answer Incorrect Answer
    B NBFCs do not form part of the payment and settlement system Correct Answer Incorrect Answer
    C NBFCs can’t operate in Urban areas Correct Answer Incorrect Answer
    D NBFCs can’t deal directly with State Governments Correct Answer Incorrect Answer
    E a & b Correct Answer Incorrect Answer

    Solution

    A government authorised financial intermediary that aims at providing banking services to the general public is called the bank. An NBFC is a company that provides banking services to people without holding a bank license. An NBFC is incorporated under the Indian Companies Act, 1956 whereas a bank is registered under Banking Regulation Act, 1949. NBFC is not allowed to accept such deposits which are repayable on demand. Unlike banks, which accepts demand deposits. Banks are an integral part of payment and settlement cycle while NBFC, is not a part of the system.

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