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

Statement 1 is incorrect: The Reserve Bank of India (RBI) manages and services both Central (Government of India) and State Government securities. RBI acts as a debt manager for both levels of government under agreements with the states.

Statement 2 is correct: Treasury Bills (T-bills) are issued only by the Government of India, not by the State Governments. States instead issue State Development Loans (SDLs) for their borrowing needs.

Statement 3 is correct: Treasury Bills are zero-coupon instruments — they are issued at a discount to the par (face) value and redeemed at par on maturity. The difference represents the interest earned.

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