Question
Consider the following statements about NBFCs in India:
1. NBFCs cannot accept demand deposits.
2. All NBFCs operating in India must be registered with the RBI.
3. NBFCs are part of the payment and settlement system and can issue cheques on themselves.
4. DICGC deposit insurance is not available to depositors of deposit-taking NBFCs.
Explanation
Statement 1 — Correct: NBFCs cannot accept demand deposits such as savings or current deposits. Only eligible NBFCs with a specific RBI registration can accept certain term deposits.
Statement 2 — Incorrect: Not every NBFC requires RBI registration. Entities already regulated by other statutory authorities may be exempt, such as SEBI-regulated venture capital funds and merchant bankers, IRDAI-regulated insurers, and Nidhi companies regulated under the MCA framework.
Statement 3 — Incorrect: NBFCs are not part of the national payment and settlement system like banks. Hence, they cannot issue cheques drawn on themselves.
Statement 4 — Correct: DICGC deposit insurance up to ₹5 lakh is available to eligible bank depositors, but does not cover deposits held with NBFCs.
Therefore, Statements 1 and 4 are correct.