UPSC Prelims 2024 · GS Paper I
Question 42: Economy and Social Development
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 ?
AnswerUPSC’s answer is (c).
Foreign institutional investors (now foreign portfolio investors) can hold government securities within limits set by the RBI and SEBI, and stock exchanges have separate debt segments for trading bonds, so statements 2 and 3 hold. UPSC's key also marks statement 1 correct, so the answer is all three. Remember: the two sure facts are foreign investors in G-secs and debt platforms on exchanges.
- 1. UPSC's key counts this as correct, although the facility is mainly described for banks and primary dealers.
- 2. Foreign institutional investors can hold G-secs within prescribed limits.
- 3. Exchanges run separate debt segments for trading bonds.
How you could have got this
- If you were sure statement 1 is correct, (b) and (d) go: each of them leaves 1 out.
What you needed to know: UPSC's key counts this as correct, although the facility is mainly described for banks and primary dealers.
- Then, if you were sure statement 3 is correct, (a) goes: it leaves 3 out.
What you needed to know: Exchanges run separate debt segments for trading bonds.
Only (c) is left. You didn’t need statement 2.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Wrong: it leaves out statement 3, which is correct.
- (b) Wrong: it leaves out statement 2, which is correct.
- (c) Right: UPSC's key accepts all three statements.
- (d) Wrong: UPSC's key also counts statement 1 as correct.
Worth knowing: The Liquidity Adjustment Facility is generally described as open to banks and primary dealers, not NBFCs, so statement 1 is disputed; UPSC's key counts all three as correct.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2024, General Studies Paper I, Series A. The paper on upsc.gov.in.