UPSC Prelims 2026 · GS Paper I
Question 99: Economy and Social Development
Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India :
- 1.NBFCs cannot accept demand deposits.
- 2.All the NBFCs operating in India have to be registered with the RBI.
- 3.NBFCs form part of the payment and settlement system and can issue cheque drawn on itself.
- 4.Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs.
Which of the statements given above is/are correct ?
AnswerUPSC’s answer is (a).
NBFCs cannot accept demand deposits, so statement 1 is right. Not every NBFC needs RBI registration: some entities, such as chit funds and nidhi companies, are exempt, so statement 2 is wrong. NBFCs are not part of the payment and settlement system and cannot issue cheques drawn on themselves, so statement 3 is wrong. DICGC deposit insurance is not available to depositors of NBFCs, so statement 4 is right.
- 1. NBFCs cannot accept demand deposits.
- 2. Some entities are exempt from RBI registration.
- 3. NBFCs are outside the payment system and cannot issue cheques on themselves.
- 4. DICGC insurance does not cover NBFC depositors.
How you could have got this
- If you were sure statement 2 is not correct, (b) and (d) go: each of them includes 2.
What you needed to know: Some entities are exempt from RBI registration.
The red flag in statement 2 is “all”. In UPSC’s papers, statements with “all” were true 41% of the time (76 statements). A hint, not a rule.
- Then, if you were sure statement 1 is correct, (c) goes: it leaves 1 out.
What you needed to know: NBFCs cannot accept demand deposits.
Only (a) is left. You didn’t need statements 3 or 4.
This follows UPSC’s provisional key; the final key could change it.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Right: statements 1 and 4 are correct.
- (b) Wrong: statements 2 and 3 are incorrect.
- (c) Incomplete: statement 1 is also correct.
- (d) Wrong: statements 2 and 3 are incorrect, and statement 1 is left out.
Only the provisional key (27 May 2026) was found; the final key replaces it when found.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2026, General Studies Paper I, Series A. The paper on upsc.gov.in.