gs1medium

With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements :

  1. 1.They cannot engage in the acquisition of securities issued by the government.
  2. 2.They cannot accept demand deposits like Savings Account.

Which of the statements given above is/are correct?

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
▶ Answer & Explanation

Correct answer: B. 2 only

NBFCs are regulated by the Reserve Bank of India and have certain restrictions on their operations. While they cannot accept demand deposits, they are permitted to invest in government securities as part of their portfolio management and liquidity requirements. Therefore, the first statement is incorrect, and the second statement accurately reflects a key regulatory difference between NBFCs and scheduled commercial banks.

Source: UPSC gs1 2010

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