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Q45 (IAS/1994) Economy › Money, Banking & Inflation › Banking structure Answer Verified

The difference between a bank and a Non-Banking Financial Institution (NBFI) is that

Result
Your answer: —  Â·  Correct: B
Explanation

Option 2 is correct. Banks typically undertake a wide range of financial activities for diverse customers (retail, corporate, government) while NBFCs are corporate entities whose principal business is financial intermediation—loans and advances, acquisition of securities, leasing, hire‑purchase and similar activities [2]. NBFCs often specialise in particular finance segments (for example term lending) and many cater to the term‑loan needs of enterprises rather than providing the full suite of banking services offered by banks; this distinction is explicitly noted in comparative descriptions of banks versus NBFIs .

Sources

  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > NON-BANKING FINANCIAL COMPANIES > p. 184
  2. [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 18. Non-Banking Financial Companies (NBFCs): > p. 84
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