{"id":1753,"date":"2024-03-29T14:59:02","date_gmt":"2024-03-29T09:29:02","guid":{"rendered":"https:\/\/lotusarise.com\/qna\/?p=1753"},"modified":"2024-04-03T07:12:54","modified_gmt":"2024-04-03T01:42:54","slug":"q-consider-the-following-statements-72","status":"publish","type":"post","link":"https:\/\/lotusarise.com\/qna\/upsc\/q-consider-the-following-statements-72","title":{"rendered":"Q.\u00a0Consider the following statements:"},"content":{"rendered":"\n
    \n
  1. The Reserve Bank of India manages and services Government of India Securities but not <\/strong>any State Government Securities.<\/li>\n\n\n\n
  2. Treasury bills are issued by the Government of India and there are no<\/strong> treasury bills issued by the State Governments.<\/li>\n\n\n\n
  3. Treasury bills offer are issued at a discount from the par value.<\/li>\n<\/ol>\n\n\n\n

    Which of the statements given above is\/are correct?<\/p>\n\n\n\n

      \n
    • 1 and 2 only<\/li>\n\n\n\n
    • 3 only<\/li>\n\n\n\n
    • 2 and 3 only<\/li>\n\n\n\n
    • 1, 2 and 3<\/li>\n<\/ul>\n\n\n\n
      \n

      Answer:<\/strong> (c) 2 and 3 only<\/strong><\/p>\n<\/blockquote>\n\n\n\n

      Notes:<\/h5>\n\n\n\n
        \n
      • Government security (G-Sec)<\/strong> is a tradeable instrument issued by the central government or state governments<\/strong>. It acknowledges the government\u2019s debt obligations.<\/li>\n\n\n\n
      • A G-Sec is a\u00a0type of debt instrument issued by the government<\/strong>\u00a0to borrow money from the public to finance its\u00a0Fiscal Deficit.<\/strong>\n
          \n
        • A debt instrument is a financial instrument that represents a contractual obligation by the issuer to pay<\/strong> the holder a fixed amount of money, known as the principal or face value, on a specified date.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
        • The\u00a0G-Secs\u00a0issuances are managed by the RBI,<\/strong>\u00a0who on behalf of the Centre, regularly conducts\u00a0G-Sec auctions\u00a0every Friday.\n
            \n
          • State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
          • Such securities are short-term<\/strong> (usually called treasury bills<\/strong>, with original maturities of less than one year- presently issued in three tenors, namely, 91-day, 182 day and 364 day<\/strong>) or long-term (usually called Government bonds or dated securities with an original maturity of one year or more).<\/li>\n\n\n\n
          • In India, the Central Government issues both, treasury bills and bonds or dated securities<\/strong> while the State Government issue only bonds or dated securities<\/strong>, which are called the State Development Loans (SDLs).<\/strong><\/li>\n\n\n\n
          • G-Secs carry practically no risk of default and,<\/strong>\u00a0hence, are called risk-free gilt-edged instruments.\n
              \n
            • Gilt-edged securities are high-grade investment bonds offered by governments and large corporations<\/strong> as a means of borrowing funds.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
            • The RBI conducts (Open Market Operations) OMOs<\/strong>\u00a0for sale or purchase of G-secs to adjust money supply conditions.\n
                \n
              • The RBI sells g-secs to remove liquidity from the system<\/strong> and buys back g-secs to infuse liquidity into the system.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
                Treasury bills<\/strong>:<\/h6>\n\n\n\n
                  \n
                • They are\u00a0short-term debt<\/strong>\u00a0instruments issued by the Central government<\/strong>.\n
                    \n
                  • State Government don\u2019t issue treasury bills<\/strong>.<\/li>\n\n\n\n
                  • Treasury bills were first issued in India in 1917. They are issued via auctions conducted by the Reserve Bank of India (RBI) at regular intervals.<\/li>\n<\/ul>\n<\/li>\n\n\n\n
                  • T-Bills are money market instruments.<\/strong><\/li>\n\n\n\n
                  • Treasury bills play a vital role in cash management of the Government.<\/li>\n\n\n\n
                  • Being risk-free, their yields at varied maturities serve as short term benchmarks and help pricing varied floating-rate products in the market.<\/li>\n\n\n\n
                  • Tenure:<\/strong> These are presently issued in three tenors, namely, 91 day, 182 day and 364<\/strong> day.<\/li>\n\n\n\n
                  • Treasury bills are issued at a discount and redeemed at the face value at maturity.<\/strong><\/li>\n\n\n\n
                  • Individuals, trusts, institutions and banks <\/strong>can purchase T-Bills. But they are usually held by financial institutions.<\/li>\n\n\n\n
                  • Banks give treasury bills to the RBI to get money under repo.<\/strong> Similarly, they can also keep it to fulfil their Statutory Liquid Ratio (SLR) requirements.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

                    Which of the statements given above is\/are correct? Answer: (c) 2 and 3 only Notes: Treasury bills:<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_kad_blocks_custom_css":"","_kad_blocks_head_custom_js":"","_kad_blocks_body_custom_js":"","_kad_blocks_footer_custom_js":"","_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[1,3],"tags":[38],"years":[55],"class_list":["post-1753","post","type-post","status-publish","format-standard","hentry","category-upsc","category-prelims","tag-indian-economy","years-55"],"acf":[],"taxonomy_info":{"category":[{"value":1,"label":"UPSC"},{"value":3,"label":"Prelims"}],"post_tag":[{"value":38,"label":"Indian Economy"}],"years":[{"value":55,"label":"2018"}]},"featured_image_src_large":false,"author_info":{"display_name":"LotusArise","author_link":"https:\/\/lotusarise.com\/qna\/author\/team-lotusarise"},"comment_info":0,"category_info":[{"term_id":1,"name":"UPSC","slug":"upsc","term_group":0,"term_taxonomy_id":1,"taxonomy":"category","description":"","parent":0,"count":1269,"filter":"raw","cat_ID":1,"category_count":1269,"category_description":"","cat_name":"UPSC","category_nicename":"upsc","category_parent":0},{"term_id":3,"name":"Prelims","slug":"prelims","term_group":0,"term_taxonomy_id":3,"taxonomy":"category","description":"","parent":1,"count":1251,"filter":"raw","cat_ID":3,"category_count":1251,"category_description":"","cat_name":"Prelims","category_nicename":"prelims","category_parent":1}],"tag_info":[{"term_id":38,"name":"Indian Economy","slug":"indian-economy","term_group":0,"term_taxonomy_id":38,"taxonomy":"post_tag","description":"","parent":0,"count":225,"filter":"raw"}],"_links":{"self":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1753","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/comments?post=1753"}],"version-history":[{"count":0,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/posts\/1753\/revisions"}],"wp:attachment":[{"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/media?parent=1753"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/categories?post=1753"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/tags?post=1753"},{"taxonomy":"years","embeddable":true,"href":"https:\/\/lotusarise.com\/qna\/wp-json\/wp\/v2\/years?post=1753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}