NBFCs play a major role in Indian Financial System by complementing and competing with banks and by bringing in efficiency and diversity into financial intermediation. In this context, answer the following questions: How

NBFCs Differ from Banks on the following Grounds: Sr. No. Grounds NBFCs Banks (i) Regulating Authority Regulated by RBI under the RBI Act, 1934 and the Companies Act, 2013. Regulated by RBI under the Banking Regulation Act, 1949. (ii) Deposits Cannot accept demand deposits. Accept demand deposits and provide cheque-issuing facilities. (iii) Payment and Settlement NBFCs cannot be part of the payment and settlement system (e.g., NEFT, RTGS). Banks are part of the payment and settlement system. (iv) Cheques Issuance NBFCs cannot issue cheques to customers. Banks can issue cheques to customers. (v) CRR and SLR NBFCs are not required to maintain CRR or SLR with RBI. Banks must maintain CRR and SLR as stipulated by the RBI. (vi) Loan Categories Specialize in loans for SMEs, infrastructure, and rural development Offer a wider range of loans, including personal, corporate, and retail loans. (vii) Credit Creation Do not create credit directly; rely on funds raised through market instruments. Banks create credit directly by accepting deposits and providing loans. (viii) FDI Norms FDI up to 100% is allowed under the automatic route (with certain conditions). FDI in banks is subject to specific caps and government approval. (ix) DICGC DICGC Insurance cover is not available for the deposit received. Deposit insurance cover is available under DICGC.