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 ?
A
1 and 4
Correct answer
B
1, 2 and 3
C
4 only
D
2, 3 and 4
Explanation
NBFCs cannot accept demand deposits, so statement 1 is correct. Not all NBFCs must register with the RBI: some, such as merchant bankers, stock brokers, venture capital funds, chit funds and Nidhi companies, fall under SEBI, state governments or the Ministry of Corporate Affairs, so statement 2 is wrong. NBFCs are not part of the payment and settlement system and cannot issue cheques drawn on themselves, so statement 3 is wrong. DICGC deposit insurance does not cover deposits in NBFCs, so statement 4 is correct.
Banking & Financial InstitutionsNon-Banking Financial CompaniesNBFCDemand depositsDICGCRBI registrationPayment system