Q. Which of the following is/are correct about Non-Banking Financial Company (NBFC)?

Which of the statements given above is/are correct?

1 only

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1 and 2 only

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2 and 3 only

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1, 2 and 3

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Solution

The correct option is B 1 and 2 only
Explanation:

Statement 1 is correct. NBFCs cannot accept demand deposits.

Statement 2 is correct. NBFC depositors are not covered under the deposit insurance facilities.

Statement 3 is incorrect. NBFCs can not issue cheques or draw a cheque on their own.

Difference between NBFCs and Banks:

Point of difference NBFCs Banks

Demand deposits NBFC cannot accept demand deposits. Banks can accept demand deposits.

Drawing a cheque NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself Banks form part of the payment and settlement system and can issue cheques drawn on themselves.

Deposit insurance facility The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs. The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is available to depositors of Banks

Act of regulation NBFCs are incorporated under the company act of 1956. Banks are incorporated under The Banking Regulation Act 1949.

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Similar questions

14. With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements:

1. They cannot engage in the acquistion of securities issued by the government.

2. They cannot accept demand deposits like Savings Account.

Which of the statements given above is/are correct?

Q5. With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements:

1. They cannot engage in the acquisition of securities issued by the government.

2. They cannot accept demand deposits like Savings Account.

Which of the statement/s given above is/are correct?

1

1934

2

3

Q. Which of the following is/are correct about Non-Banking Financial Companies (NBFCs)?

Which of the statements given above is/are correct?

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Point of difference	NBFCs	Banks
Demand deposits	NBFC cannot accept demand deposits.	Banks can accept demand deposits.
Drawing a cheque	NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself	Banks form part of the payment and settlement system and can issue cheques drawn on themselves.
Deposit insurance facility	The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs.	The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is available to depositors of Banks
Act of regulation	NBFCs are incorporated under the company act of 1956.	Banks are incorporated under The Banking Regulation Act 1949.