Money and banking

Indian Economic System(CSC)

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Regarding the bidding of the Government bonds, consider the following statements:

1. Competitive bids are made by wellinformed institutional investors such as banks, fi nancial institutions, PDs, mutual funds, and insurance companies.

2. Only, the corporate bodies are allowed participation on “non-competitive” basis in select auctions of dated Government of India (GoI) securities and Treasury Bills.

Which of the statements given above is/are correct?

1 only

2 only

1 and 2 both

Neither 1 nor 2

Explanation:

1 only

Government of India securities (G-sec), State Development Loans (SDL) and Treasury Bills (T-Bills are issued in the primary market through auctions conducted by Reserve Bank of India (RBI).
An investor, depending upon eligibility, may bid in an auction under Competitive Bidding or Non-Competitive Bidding.
Participation in the Scheme of non-competitive bidding is open to retail investors.

By: Parvesh Mehta

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