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 ✓ UPSC's answer
- (d) 1, 2 and 3
Why the answer is (c)
• Statement 3 is correct: Treasury bills are zero-coupon instruments sold at a discount and redeemed at par, the difference being the return.
• Statement 2 is correct: only the Government of India issues T-bills (91, 182 and 364 days); States borrow through State Development Loans, not T-bills.
• Statement 1 is wrong: under Sections 20–21A of the RBI Act, the RBI manages the public debt of both the Centre and the States, including State Government securities.
• Hence 2 and 3 only, option (c).
Why the other options are wrong
- (a) 1 and 2 only
- Statement 1 is wrong: RBI manages State securities too.
- (b) 3 only
- Statement 2 is also correct: States issue no T-bills.
- (d) 1, 2 and 3
- Statement 1 is wrong.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2018, held on 3 June 2018. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.