The correct answer is 1 only. Explanation & Key Takeaways: Non-Banking Financial Companies (NBFCs): • As per the RBI guidelines “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.” Hence, statement 1 is correct. • Section 45-IB of the RBI Act requires NBFCs to compulsorily maintain liquid assets to the tune of 15% of accepted deposits, wherein 10% thereof should be in the nature of approved securities. • NBFCs lend and make investments and hence their activities are akin to that of banks; however, there are a few differences as given below: • NBFC cannot accept demand deposits; Hence, statement 2 is not correct. • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself; Hence, statement 3 is not correct. • The deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in the case of banks. • NBFCs are not banks, but their activities include lending and other activities such as providing loans and advances, credit facilities, savings and investment products, trading in the money market, managing stock portfolios, money transfers, and so on. • Deposits can be accepted by NBFC, but only term deposits and deposits repayable on demand is not accepted. • The RBI's Department of Non-Banking Supervision (DNBS) is tasked with regulating and supervising NBFCs in accordance with the regulatory provisions contained in Chapters III B and C and Chapter V of the Reserve Bank of India Act, 1934.