gs1medium

Consider the following statements:

  1. 1.The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
  2. 2.Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
  3. 3.Treasury bills are issued at a discount from the par value. Which of the statements given above is/are correct?
  1. A.1 and 2 only
  2. B.3 only
  3. C.2 and 3 only
  4. D.1, 2 and 3
▶ Answer & Explanation

Correct answer: C. 2 and 3 only

The RBI, as the central bank, manages and services both Central Government and State Government securities. Treasury bills are short-term debt instruments issued by the Central Government to manage its cash flow; State governments do not issue treasury bills. These bills are indeed sold at a discount to their face value (par value) and the investor receives the par value at maturity, with the difference representing the interest earned.

Source: UPSC gs1 2018

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