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Question

Which among the followings are correct statements with regard to NBFC in India?

(A) All NBFCs should be registered with RBI.

(B) NBFCs cannot accept demand deposits.

(C) NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.

(D) Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs.

Choose the correct from the options given below:

A (A), (B), (C) only Correct Answer Incorrect Answer
B (A), (B), (C), (D) only Correct Answer Incorrect Answer
C (A), (B), (D) only Correct Answer Incorrect Answer
D (A), (D) only Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

NBFCs lend and make investments and hence their activities are akin to that of banks; however, there are a few differences as given below: i. NBFC cannot accept demand deposits; ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on themselves; iii. the deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in the case of banks.

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