Previous Year Question
Which of the following is not a type of depository institution?
Correct Answer: B
Detailed Solution
A Depository Institution is generally a financial institution that obtains an important part of its funds by accepting deposits from the public. The official definition of the U.S. Federal Reserve includes commercial banks, savings and loan associations, savings banks and credit unions among depository institutions.
The basic institutional character of NABARD is different. According to NABARD's official description, it is India's apex development bank, established in 1982 to promote agriculture and rural development. Its major functions include supporting the rural credit system, refinancing, infrastructure development, institutional development, and providing financial assistance related to agriculture and rural development.
An important factual qualification: it would not be completely correct to say that NABARD cannot receive deposits of any kind. RBI records show that, in certain arrangements, banks may place deposits with NABARD, such as those connected with shortfalls in priority-sector targets. However, NABARD is not an ordinary retail public deposit-taking institution where the general public maintains savings or current deposits. Therefore, under the general depository-institution classification used in the question, NABARD belongs to a different category as a development financial institution.