Change set

Pick exam & year, then Go.

Question map
Not attempted Correct Incorrect ★ Bookmarked
Loading…
Q24 (IAS/2010) Economy › Money, Banking & Inflation › Banking regulation reforms Answer Verified

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 statements given above is/are correct ?

Result
Your answer: —  ·  Correct: B
Explanation

Statement (1) is incorrect. NBFCs are defined to include companies engaged in acquisition of shares, debentures, bonds or securities issued by the Government or local authorities and hence may transact in government securities as part of their investment business [1]. Statement (2) is correct. Unlike banks, NBFCs cannot accept demand deposits or offer cheque-withdrawable savings/demand accounts; they do not form part of the payment and settlement system and deposit insurance is not available to their depositors [2]. Therefore only statement 2 is correct, making option “2 only” the right choice.

Sources

  1. [1] https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1167
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > EL DIFFERENCE BETWEEN BANKS AND NBFCs > p. 187
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
Community Performance
Out of everyone who attempted this question.
64%
got it right
✓ Thank you! We'll review this.

SIMILAR QUESTIONS

IAS · 2024 · Q42 Relevance score: 5.47

Consider the following statements : 

1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India.

 2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs). 

3. In India, Stock Exchanges can offer separate trading platforms for debts.

 Which of the statements given above is/are correct ?

CDS-II · 2022 · Q68 Relevance score: 5.10

Which one of the following statements about Non-Banking Financial Companies (NBFCs) is not correct?

IAS · 2020 · Q40 Relevance score: 3.79

With reference to the Indian economy, consider the following statements : 1. 'Commercial Paper' is a short-term unsecured promissory note. 2. 'Certificate of Deposit' is a long-term instrument issued by the Reserve Bank of India to a corporation. 3. 'Call Money' is a short-term finance used for interbank transactions. 4. 'Zero-Coupon Bonds' are the interest bearing short-term bonds issued by the Scheduled Commercial Banks to corporations. Which of the statements given above is/are correct ?

IAS · 2024 · Q49 Relevance score: 3.57

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements : 1. There is no minimum capital requirement for wholly owned banking subsidiaries in India. 2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements given above is/are correct ?

IAS · 2018 · Q96 Relevance score: 3.25

With reference to the governance of public sector banking in India, consider the following statements : 1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade. 2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected. Which of the statements given above is/are correct ?