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UPSC Prelims 2026 GS Paper 1, question 99

Topic: Economy

Q99

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 ?

  1. (a) 1 and 4Correct answer
  2. (b) 1, 2 and 3
  3. (c) 4 only
  4. (d) 2, 3 and 4

Solution.

Answer: (a) 1 and 4

  1. Statement 1 is correct: under RBI regulations, Non-Banking Financial Companies (NBFCs) cannot accept demand deposits.
  2. Statement 2 is incorrect: not all NBFCs must register with the RBI; housing finance companies, insurance companies, stock-broking/merchant-banking firms, venture capital funds, Nidhi companies, and chit companies regulated by other statutory regulators are exempt from registration under Section 45-IA of the RBI Act.
  3. Statement 3 is incorrect: NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on themselves.
  4. Statement 4 is correct: the deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to depositors of NBFCs.