BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
If a company, which is not a non-banking financial company wants to collect public deposits, it is governed by____Act
A
RBI Act 1934
B
Banking companies Act
C
Companies Act 1956
D
Central Government
Explanation: 

Detailed explanation-1: -All NBFCs are not entitled to accept public deposits. Only those NBFCs to which the Bank had given a specific authorisation and have an investment grade rating are allowed to accept/ hold public deposits to a limit of 1.5 times of its Net Owned Funds.

Detailed explanation-2: -Is there a threshold for applicability of SARFAESI Act on NBFCs? Yes, eligible NBFCs are allowed to enforce security interest in cases where the security interest was created in their favour to secure a financial assistance having a debt (as defined under SARFAESI Act) amounting to Rs. 50 lacs.

Detailed explanation-3: -In terms of section 45-IA of the Reserve Bank of India Act, 1934 (“Act”), any NBFC cannot commence or carry on its business without (i) obtaining a certificate of registration, and (ii) having net owned funds (“NOF”) of INR 25 lakh or such amount, not exceeding INR 200 lakh, as the RBI may specify.

Detailed explanation-4: -Registration of an NBFC with the RBI merely authorizes it to conduct the business of NBFC. RBI does notguarantee the repayment of deposits accepted by NBFCs. NBFCs cannot use the name of the RBI in any manner while conducting their business.

There is 1 question to complete.