UPSC Prelims 2024 · Question 82 of 97
UPSC Prelims 2024 question on Liquidity Adjustment Facility Nbfc Access
- ExamUPSC CSE
- Year2024
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicMoney Market
- DifficultyHard
- TypeStatement
Consider the following statements:
1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India.
2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs).
3. In India, Stock Exchanges can offer separate trading platforms for debts.
Which of the statements given above is/are correct?
Show answer
Answer: D. 2 and 3 only
Verdict
Correct statements: 2 and 3 only → Option (d).
Statement by statement
Statement 1 – INCORRECT: LAF is a facility extended by RBI to scheduled commercial banks (excluding RRBs) and Primary Dealers (PDs) to avail of liquidity in case of requirement or park excess funds with RBI. NBFCs form part of PDs and major NBFCs not part of PDs remain outside the preview of accessing LAF window of RBI. Hence statement 1 is not correct.
Statement 2 – CORRECT: FIIs who obtain specific approval from SEBI have been permitted to invest 100% of their portfolios in debt securities. Such investment may be in listed or to be listed corporate debt securities or in dated government securities. Hence statement 2 is correct.
Statement 3 – CORRECT: With an aim to develop corporate debt market in the country, SEBI allowed creation of a separate debt segment on stock exchanges, wherein banks are allowed to become trading members of the bourses and trade in this market. NSE became the first to unveil a separate trading platform for debts. Hence statement 3 is correct.