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?

Option (A) — 1 and 4

• NBFCs are financial institutions that provide banking-like services but do not hold a full banking license. They are regulated by the RBI under the RBI Act, 1934.
• NBFCs cannot accept demand deposits (savings/current accounts). Some categories of NBFCs can accept time/term deposits, but not demand deposits.
• Not all NBFCs need to be registered with RBI. Certain types such as housing finance companies (regulated by NHB), insurance companies, and some others are exempt from RBI registration.
• NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on themselves. Also, DICGC deposit insurance is not available for deposits placed with NBFCs.

• 1. NBFCs cannot accept demand deposits: Correct. NBFCs are not permitted to accept demand deposits, which is a key distinction from commercial banks.
• 2. All NBFCs operating in India have to be registered with RBI: Incorrect. Certain categories of NBFCs, such as housing finance companies, insurance companies, chit fund companies, and others, are regulated by other authorities and are exempt from RBI registration requirements.
• 3. NBFCs form part of the payment and settlement system and can issue cheques drawn on itself: Incorrect. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on themselves.
• 4. DICGC deposit insurance is not available to depositors of deposit-taking NBFCs: Correct. The DICGC covers deposits in banks only, not deposits in NBFCs.