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JAIIB IE&IFS Unit 25 — Non-Banking Financial Companies (NBFCs): Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 1 of the November 2026 cycle (1 November 2026)

This page is a free slice of our JAIIB IE&IFS question bank for Unit 25 — Non-Banking Financial Companies (NBFCs) (Module C — Indian Financial Architecture). The Mock Centre holds 74 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

IE&IFS · Module C74 MCQs in the Mock Centre5 free belowPaper on 1 November 2026

Key facts examiners test from this unit

  1. NBFC: Companies-Act company; cannot issue self-drawn cheques, borrow from RBI, or take demand deposits; no DICGC cover; principal business ≠ agriculture/industry/property.
  2. Sec 45-IA: CoR + NOF; 50-50 test (financial assets >50% of assets AND financial income >50% of gross income).
  3. History: 1960s origins; Companies-Act regulation → Chapter III-B (1964 insertion; comprehensive 1997 regime per Check Your Progress); James S. Raj 1975 (deposits-to-NOF); 7,000 (1981)→~30,000; A.C. Shah 1992; FDI automatic Aug 2016.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
An NBFC is a company registered under the:
Why (b): An NBFC is a company registered under THE COMPANIES ACT — incorporated as a company, then registered WITH RBI to do NBFI business.
Question 2 of 5
For registration, an NBFC obtains from RBI a:
Why (b): For registration, an NBFC obtains from RBI a CERTIFICATE OF REGISTRATION (CoR) — the entry ticket.
Question 3 of 5
An NBFC differs from a bank because it CANNOT:
Why (b): The bright lines: NBFCs lend and (some) take term deposits, but demand deposits, cheque issuance and the payment/settlement system belong to banks.
Question 4 of 5
Deposits with NBFCs versus banks: which protection difference is TRUE?
Why (b): DICGC's Rs 5-lakh cover applies to BANK deposits only; NBFC depositors rely on the company's strength — why RBI restricts deposit-taking NBFCs (Category A) tightly.
Question 5 of 5
Most microfinance institutions (MFIs) that scale up register as:
Why (a): The NBFC-MFI category (with qualifying-asset, income-cap and conduct rules) is the regulated home for scaled microfinance lending.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
BankNBFCDemand deposits/payments/DICGC vs none
45-IA45-IBRegistration/NOF vs liquid assets
Practise all 74 questions on Unit 25. The free demo opens a slice of every subject with the same explanations; the IE&IFS Online-only pass unlocks all 3,032 IE&IFS questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.