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The difference between a bank and a Non-Banking Financial Institution (NBFI) is that
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] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > NON-BANKING FINANCIAL COMPANIES > p. 184
- [2] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > 18. Non-Banking Financial Companies (NBFCs): > p. 84
SIMILAR QUESTIONS
Which one of the following statements about Non-Banking Financial Companies (NBFCs) is not correct?
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 ?
A non-banking financial company cannot
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 ?