Q. With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements : - They cannot engage in the acquisition of securities issued by the government.
- They cannot accept demand deposits like Savings Account.
Which of the statements given above is/are correct? (UPSC Prelims 2010)
Answer:
2 only
Notes: NBFCs in India are regulated by RBI under the RBI Act, 1934. Statement 1 is incorrect as NBFCs can invest in government securities as part of their investment activities. Statement 2 is correct; NBFCs cannot accept demand deposits (e.g., savings accounts) like banks, only term deposits with maturity ≥12 months, to prevent bank-like risks without banking license. This distinction ensures financial stability, as per RBI guidelines and Section 45I(f) of RBI Act.