NBFCs raise their funds from different sources such as like banks, insurance companies, public deposits (only for NBFCs holding license to accept deposits from RBI), through issue of debentures, commercial papers and other inter-corporate loans.

Yes if they have been granted a license reflecting their eligibility to accept deposits from public. However these deposits cannot be demand deposits

NBFCs lend and make investments and hence their activities are similar to that of banks; however there are a few differences as given below; a. NBFC cannot accept demand deposits b. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself, c. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

In terms of Section 45-IA of the RBI Act, 1934, no Non-banking Financial company can commence or carry on business of a non-banking financial institution without a) obtaining a certificate of registration from the Bank and without having a Net Owned Funds of ? 25 lacs (? Two crore since April 1999). However, in terms of the powers given to the Bank, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982,Housing Finance Companies regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company.