Q. With reference to the core difference between Banks and Non-Banking Financial Companies (NBFCs) in India, consider the following statements:
1.A bank can accept demand deposits, which are withdrawable by cheque, whereas a non-deposit-taking NBFC cannot accept any form of deposits from the public.
2.A bank is an integral part of the country’s payment and settlement system, while an NBFC is generally not allowed to issue instruments that form part of the core payment system.
Which of the statements given above is/are correct?
Answer: B
Notes:
Explanation:
Statement 1: Incorrect. A bank can accept demand deposits, which is true. However, a deposit-taking NBFC is permitted to accept public deposits, though they cannot accept demand deposits.
Statement 2: Correct. Banks are crucial for the payment and settlement system (RTGS, NEFT, Cheques). NBFCs are primarily financial intermediaries and are not part of the core payment and settlement system, meaning they cannot issue self-drawn, non-transferable demand drafts, or instruments against deposits.
