Q. With reference to financial institutions in India, consider the following statements:
1.A financial institution that accepts deposits, lends money, and allows withdrawal through cheques is classified as a bank.
2.A non-bank financial institution can perform all functions of a bank except allowing depositors to withdraw money using cheques.
Which of the statements given above is/are correct?
Answer: C
Notes:
Explanation:
- A bank is defined by its ability to accept deposits, lend to borrowers, and allow withdrawal via cheques, as per the Banking Regulation Act, 1949.
- A Non-Banking Financial Company (NBFC) or other non-bank institutions can accept deposits and lend but do not have cheque-drawing facilities, meaning depositors cannot issue cheques against their deposits.
Source- 11th NCERT: Economics: Indian Economic Development and TMH Indian Economy by Ramesh Singh
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