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?

QUESTION

Medium

Economy

Prelims 2018

Consider the following statements:

The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
Treasury bills offer are issued at a discount from the par value.

Which of the statements given above is/are correct?

Select an option to attempt

Explanation

The Reserve Bank of India manages public debt and issues Indian currency-denominated loans on behalf of the central and state governments under the powers derived from the Reserve Bank of India Act. The RBI is the debt manager for both the Central Government and the State Governments. RBI manages the debt of state governments based on separate agreements. Hence, statement 1 is incorrect.

Treasury bills or T-bills, which are money market instruments, are short-term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91-day, 182-day and 364 days.

Treasury bills are zero coupon securities and pay no interest. They are issued at a discount and redeemed at the face value at maturity.

Therefore, statements 2 and 3 are correct.

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