Financial Awareness - Risk, Stability & Emerging Finance
Which of the following best explains why only banks can accept demand deposits and not NBFCs?
Which of the following best explains why only banks can accept demand deposits and not NBFCs?
hard Q10 of 15
Step-by-Step Solution
Step 1: Understand regulatory framework
Banks operate under the Banking Regulation Act, 1949 and have licenses to accept demand deposits.Step 2: Analyze incorrect options
NBFCs can lend money but cannot accept demand deposits; banks are regulated by RBI; NBFCs cannot issue currency notes.Step 3: Explain why only banks accept demand deposits
Legal licensing and regulatory framework restrict demand deposit acceptance to banks only.Final Answer:
Banks have a license under the Banking Regulation Act, 1949 to accept demand deposits → Option BQuick Check:
Demand deposits acceptance = bank license under Banking Regulation Act ✅
Quick Trick: Focus on licensing under Banking Regulation Act for demand deposits.
Common Mistakes:
- Assuming NBFCs can accept demand deposits or issue currency.
Master "Risk, Stability & Emerging Finance" in Financial Awareness
Start learning the concept with an interactive lesson.
Want More Practice?
15+ quiz questions · All difficulty levels · Free
Free Signup - Practice All QuestionsMore Financial Awareness Quizzes