Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India :
- 1.NBFCs cannot accept demand deposits.
- 2.All the NBFCs operating in India have to be registered with the RBI.
- 3.NBFCs form part of the payment and settlement system and can issue cheque drawn on itself.
- 4.Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs.
Which of the statements given above is/are correct ?
Show answer
Answer: A. Statement 1 is correct: NBFCs cannot accept demand deposits. Statement 2 is wrong: some NBFCs, such as insurance companies, chit funds and stock brokers, are regulated by other bodies and need no RBI registration. Statement 3 is wrong: NBFCs are not part of the payment and settlement system and cannot issue cheques on themselves. Statement 4 is correct: DICGC insurance does not cover NBFC deposits. So 1 and 4.
Watch for: Students assume every NBFC must register with the RBI.
Why the other options are wrong
- B. Wrong because statements 2 and 3 are false.
- C. Wrong because statement 1 is also correct.
- D. Wrong because statements 2 and 3 are false.
Source to check: RBI FAQs on NBFCs (rbi.org.in); RBI Act, 1934, Section 45-IA
Answer from the provisional UPSC key; it may change when the final key is out. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.