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?
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A hard Economy multiple-choice question from UPSC Prelims 2026. Attempt it above, then check the correct answer and detailed explanation below.
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Correct answer: A. 1 and 4
Statements 1 and 4 are correct — NBFCs cannot accept demand deposits, and the DICGC deposit-insurance cover is not available to depositors of deposit-taking NBFCs. Statement 2 is wrong — not all NBFCs need RBI registration (some are regulated by other regulators and are exempt). Statement 3 is wrong — NBFCs are not part of the payment and settlement system and cannot issue cheques drawn on themselves. So 1 and 4 — option (a).
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