Which of the following parameters form the basis for the difference between NonBanking Financial Com...........

Indian Economy (Easy) Money and banking

Which of the following parameters form the basis for the difference between NonBanking Financial Companies (NBFCs) visa-vis Banks?

NBFCs cannot accept demand deposits.

NBFCs do not form part of the Payment and Settlement System.

NBFCs are not under the purview of the deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation.

All of the Above

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Explanation:

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 or 2013 engaged in the business of loans and advances, acquisition of shares, leasing, hire-purchase, insurance business, chit business etc. NBFCs lend and make investments and hence their activities are akin to that of banks. However, they are different from the Banks on the following parameters -:
Acceptance of Demand Deposits
? Banks can do almost all financial services and products generally authorized to them. They can accept demand deposits (demand deposits have high liquidity and is considered as good as money). NBFCs can’t accept demand deposits.
Part of the Payment and Settlement System
? While the Banks are part of the payment and settlement system, NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
The purview of deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation
? The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.
Hence option (d) is the correct answer.