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Banks and Non-Banking Financial Companies (NBFCs) are two important pillars of the Indian financial system. While both are financial intermediaries that offer similar services such as loans, asset financing, wealth management, and investments, they differ in several regulatory and operational aspects. In the context of corporate governance in the banking and financial sector, it is essential to understand how these entities differ and the specific role NBFCs play in economic development. Differences Between Banks and NBFCs 1. Regulatory Authority: Banks in India are regulated by the Reserve Bank of India (RBI) under the Banking Regulation Act, 1949. They are tightly monitored in terms of capital adequacy, risk exposure, priority sector lending, and corporate governance norms. NBFCs, on the other hand, are also regulated by the RBI but under the provisions of the Reserve Bank of India Act, 1934, and are subject to less stringent regulations. NBFCs are not allowed to accept demand deposits, which limits their operations as compared to banks. 2. Deposit Acceptance: Banks can accept demand deposits such as savings and current accounts, which allows them a stable and cost-effective source of funds. NBFCs are generally not permitted to accept demand deposits from the __________ ___ _________ ___ _________ ________ __________ ____ ____.
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