Question
Consider the following statements:
1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 Only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer:
C
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Explanation:
The first statement is incorrect. The Reserve Bank of India (RBI) manages and services both Government of India Securities and State Government Securities. The RBI acts as a central bank for the government and handles the issuance, management, and servicing of both central and state government securities.
The second statement is correct. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments. Treasury bills are short-term debt instruments issued by the central government to meet its short-term funding requirements.
The third statement is correct. Treasury bills are issued at a discount from the face value and do not carry any coupon or interest rate. The difference between the issue price and the face value represents the interest earned by the investor.