Question 95 from UPSC CSE 2024 - Economic s

Question

In India, which of the following can trade in Corporate Bonds and Government Securities?
1. Insurance Companies
2. Pension Funds
3. Retail Investors
Select the correct answer using the code given below:

IASCODEX · Accepted Answer

Correct Option: D. 1, 2, and 3

Strategy: - Focus on key participant categories: insurance companies, pension funds, and retail investors.
- All three groups have regulatory access to India's bond and government securities markets.
- Recent reforms, such as the RBI Retail Direct Scheme and market platforms, have broadened access for retail investors.
- No exclusion applies to any category, indicating an "all of the above" approach for participation.

Key Info: ## Corporate Bonds
-   **Definition** -- Debt instruments issued by companies to raise capital.
-   **Trading** -- Typically traded in the secondary market via exchanges like BSE and NSE.
-   **Institutional Investors** -- Insurance companies and pension funds are permitted by SEBI and IRDAI/PFRDA regulations to invest in both corporate bonds and government securities, playing a vital role in India's fixed income market.

## Government Securities (G-Secs)
-   **Definition** -- Sovereign debt instruments issued by the Government of India or state governments.
-   **Types** -- Includes treasury bills (short-term) and dated securities/bonds (long-term).
-   **Primary Participants** -- Commercial banks, primary dealers (PDs), cooperative banks, mutual funds, insurance companies, and pension/provident funds.

## Retail Investor Access
-   **G-Secs** -- Historically restricted, retail investors can now directly trade through the RBI Retail Direct Scheme (launched in 2021). This scheme allows individuals to open a Retail Direct Gilt (RDG) account for participation in both primary and secondary G-Sec markets.
-   **Corporate Bonds** -- Stockbroking platforms have enabled retail participation.
-   **Context** -- This inclusive participation is part of broader financial market reforms aimed at deepening bond markets in India and improving retail investor access.

IASCODEX · Answer

Option A: 1 and 2 only

IASCODEX · Answer

Option B: 2 and 3 only

IASCODEX · Answer

Option C: 1 and 3 only

In India, which of the following can trade in Corporate Bonds and Government Securities? Insurance Companies Pension Funds Retail Investors Select the correct answer using the code given below:

In India, which of the following can trade in Corporate Bonds and Government Securities?

Insurance Companies

Pension Funds

Retail Investors
Select the correct answer using the code given below: