Banking & Financial Awareness Quiz: We have created many quizzes on Banking Awareness and this set is one of them. These questions are most important for banking and insurance exams. The question asked in the Banking Awareness section are based both on static banking and that to current banking in news. These Banking Awareness sets will guide you in all banking exams like IBPS Clerk, IBPS PO, SBI Clerk, SBI PO, RRB Clerk and PO and other exams. So attempt all the sets now.
Topic of the Quiz: Non-Banking Financial Company (NBFC)
- A Non-Banking Financial Company (NBFC) is a company registered under which act?
A) RBI Act 1934
B) Companies Act, 1956
C) NBFC Act 1956
D) Government Securities Regulations, 1913
View answer
Option B
Explanation: A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of an immovable property.
- Which of the following activity is not permissible for NBFC?
A) loans and advances
B) acquisition of shares
C) insurance business
D) construction of an immovable property
View answer
Option D
Explanation: You can read about the permissible business of NBFC on our post on NBFC.
- A non-banking institution that has a principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions is known as?
A) Principal non-banking company
B) Residential non-banking company
C) Residuary non-banking company
D) Optional non-banking company
View answer
Option C
Explanation: Residuary non-banking company
- When is an Financial activity considered as the principal business of any entity?
A) financial assets constitute more than 50 percent of the total assets
B) Income from financial assets constitute more than 50 percent of the gross income
C) Income from financial assets constitute more than 40 percent of the gross income
D) Both A and B
View answer
Option D
Explanation: Financial activity as a principal business is when a company’s financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 per cent of the gross income
- Which of the following test is used by RBI to determine whether or not a company is into financial business?
A) 50-50 test
B) 80-20 rule
C) fintech test
D) nominal test
View answer
Option A
Explanation: Financial activity as principal business is when a company’s financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 per cent of the gross income. A company which fulfils both these criteria will be registered as NBFC by RBI.
- Which of the following is false about NBFC?
A) NBFC cannot accept demand deposits
B) NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself
C) deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs
D) NBFC cannot undertake insurance business
View answer
Option D
Explanation: They can undertake the insurance business. Points A, B and C are the difference between NBFC and banks.
- What is the minimum Net Owned Funds required by NBFCs for registration with RBI?
A) Rs 5 lakhs
B) Rs 25 lakhs
C) Rs 50 lakhs
D) Rs 2 crore
View answer
Option D
Explanation: It should have a minimum net owned fund of Rs 200 lakh. (₹ Two crore since April 1999). Note the minimum net owned fund (NOF) required for specialized NBFCs like NBFC-MFIs, NBFC-Factors, CICs
- NBFCs with asset size more than ___ are considered to be systemically important NBFCs.
A) Rs 500 crore
B) Rs 100 crore
C) Rs 200 crore
D) Rs 350 crore
View answer
Option A
Explanation: NBFCs whose asset size is of ₹ 500 cr or more as per last audited balance sheet are considered as systemically important NBFCs.
- Core Investment Companies with asset size of less than _______ are exempted from registration with RBI.
A) Rs 150 crore
B) Rs 50 lakh
C) Rs 100 crore
D) Rs 50 crore
View answer
Option C
Explanation: Core Investment Companies with asset size of less than ₹ 100 crore, and those with asset size of ₹ 100 crore and above but not accessing public funds are exempted from registration with the RBI.
- Which of the following does not have any roles in the regulation of NBFCs?
A) National Housing Bank
B) Reserve Bank of India
C) SIDBI
D) Ministry of Corporate Affairs
View answer
Option C
Explanation: Housing Finance Companies, Merchant Banking Companies, Stock Exchanges, Companies engaged in the business of stock-broking/sub-broking, Venture Capital Fund Companies, Nidhi Companies, Insurance companies and Chit Fund Companies are NBFCs but they have been exempted from the requirement of registration under Section 45-IA of the RBI Act, 1934 subject to certain conditions. Housing Finance Companies are regulated by National Housing Bank, Merchant Banker/Venture Capital Fund Company/stock-exchanges/stock brokers/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments and Nidhi Companies are regulated by Ministry of Corporate Affairs, Government of India. Companies that do financial business but are regulated by other regulators are given specific exemption by the Reserve Bank from its regulatory requirements for avoiding duality of regulation.
