UPPSC-UPPCS Mains- Answer writing practice #67

UPPSC/UPPCS Mains- Answer writing practice

Discuss the difference between NBFCs and banks. (125 words)

एनबीएफसी और बैंकों के बीच अंतर पर चर्चा करें। (125 शब्द)

Model Answer

Banks and NBFCs are the key financial intermediaries which offers similar services to the customers,
however some basic differences exists between them.
· A NBFC is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/government securities etc. but does not include any institution whose principal business is that of agricultural activity, industrial activity, purchase of sale of any goods or providing any services and sale or purchase of immovable properties whereas
commercial banks are incorporated under the Banking Regulations Act, 1949 and RBI Act.
· NBFCs cannot accept demand deposits.
· NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself.
· Deposit insurance facility is not available to depositors of NBFCs, unlike in case of banks.

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