In India, which of the following can trade in Corporate Bonds and Government Securities ? 1. Insurance Companies 2. Pension Funds 3. Retail Investors Select the correct answer using the code given below :

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3 ✓ UPSC's answer

Why the answer is (d)

• Insurance companies are among the largest institutional holders of Government Securities and corporate bonds, since regulators require them to invest a large share of their funds in such instruments — item 1 qualifies.

• Pension funds (EPFO, NPS fund managers) likewise invest heavily in G-Secs and high-rated corporate bonds — item 2 qualifies.

• Retail investors can buy and sell G-Secs through the RBI Retail Direct platform (2021) and through stock-exchange debt segments and 'gilt' mutual funds, and can trade listed corporate bonds on exchanges — item 3 qualifies.

• The RBI and SEBI have deliberately widened access to deepen the bond market.

• Hence 1, 2 and 3, option (d).

Why the other options are wrong

(a) 1 and 2 only: Retail investors can also trade these securities via RBI Retail Direct and exchanges.
(b) 2 and 3 only: Insurance companies are major participants in both markets.
(c) 1 and 3 only: Pension funds also invest in and trade these securities.

Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2024, held on 16 June 2024. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.