Question 19 from UPSC CSE 2021 - Economics

Question

With reference to India, consider the following statements:
1. Retail investors through demat account can invest in 'Treasury Bills' and 'Government of India Debt Bonds' in the primary market.
2. The 'Negotiated Dealing System-Order Matching' is a government securities trading platform of the Reserve Bank of India.
3. The 'Central Depository Services Ltd' is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.
Which of the statements given above is/are correct?

Accepted Answer

Correct Option: B. 1 and 2

Strategy: Focus on recent major RBI policy changes: since 2021, retail investors can open gilt accounts and invest directly in Treasury Bills and Government Bonds (confirming statement 1). NDS-OM, referenced often in news, is RBI's electronic trading platform for government securities, aligning with statement 2. Statement 3 can be flagged because RBI is not a CDSL promoter; instead, banks and BSE are. Eliminating statement 3 narrows the answer decisively to option B.

Key Info: **Treasury Bills and Government Bonds**
Treasury Bills (T-bills) are short-term debt instruments issued by the Government of India with maturities of 91 days, 182 days, or 364 days. Government of India Debt Bonds (G-Secs) are longer-term securities with maturities generally ranging from 1 year to 40 years. Until February 2021, retail participation in the primary market was limited, usually via non-competitive bids on exchanges or gilt mutual funds. With the RBI's Retail Direct scheme (launched November 2021), individuals can register directly with RBI to open gilt (Retail Direct Gilt, or RDG) accounts and invest in primary issuances and secondary trading of government securities including T-bills and bonds.

**Negotiated Dealing System-Order Matching (NDS-OM)**
The Negotiated Dealing System-Order Matching (NDS-OM) is an anonymous, screen-based electronic order-matching platform for secondary market trading of government securities, operated by the Reserve Bank of India. NDS-OM facilitates trading for banks, primary dealers, insurance companies, mutual funds, and other regulated entities maintaining SGL (Subsidiary General Ledger) accounts with RBI.

**Central Depository Services Ltd (CDSL)**
Central Depository Services Ltd (CDSL) is one of India's two main depository institutions, inaugurated in 1999. It was promoted by BSE Ltd. (formerly Bombay Stock Exchange) in collaboration with leading Indian banks such as State Bank of India, Bank of India, HDFC Bank, Standard Chartered Bank, and others. RBI is not a promoter of CDSL. CDSL enables investors to hold and transact securities (equities, bonds, debentures, mutual fund units, etc.) in dematerialized (demat) form, facilitating book-entry transfer of securities and settlement.

Answer

Option A: 1 only

Answer

Option C: 3 only

Answer

Option D: 2 and 3