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With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements: 

1. They cannot engage in the acquisition of securities issued by the government. 

2. They cannot accept demand deposits like Savings Account 

Which of the statement given above is/ are correct? 

(a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2

1 Answer

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(b) A non-banking financial company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/ securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. They cannot accept demand deposits like commercial banks as they are not a part of clearance and settlement system.

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