With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements:
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- A1 only
- B2 onlyCorrect
- CBoth 1 and 2
- DNeither 1 nor 2
Explanation
The question asks about the characteristics of Non-banking Financial Companies in India.
Statement 1 is incorrect because NBFCs are generally prohibited from accepting demand deposits. Demand deposits are those that can be withdrawn by the depositor at any time, such as those in a savings or current account. Only certain NBFCs can accept time deposits, which have a fixed maturity period.
Statement 2 is correct because NBFCs do not form part of the payment and settlement system. Consequently, they cannot issue checks drawn on themselves. This function is restricted to licensed banking institutions.
Since only the second statement is true, the correct option is B.
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