Q. Consider the following statements regarding Non-Banking Financial Companies (NBFCs):
1.NBFCs are allowed to accept demand deposits from the public.
2.NBFCs cannot issue cheques drawn on themselves as they do not form part of the payment and settlement system.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B
Notes:

Explanation:

  • NBFCs are not allowed to accept demand deposits (i.e., deposits withdrawable by cheque like savings or current accounts).
  • Since NBFCs are not part of the payment and settlement system, they cannot issue cheques drawn on themselves, unlike banks.

Source: Indian Economy (Ramesh Singh)

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