🧷 Authentic Classroom Explanation by IAS Monk

📌 The Question:

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?

(a) 1 and 2 only
(b) 3 only
(c) 1, 2 and 3
(d) 2 and 3 only

✅ Correct Answer: (d) 2 and 3 only

🧠 Curiosity Raiser

Why does UPSC repeatedly test who can access RBI facilities instead of asking about interest rates directly?

📘 Enrichment Notes (Prelims-Oriented | RBI + Markets)

❌ Statement 1 — Incorrect

• Liquidity Adjustment Facility (LAF) is available only to:
  • Scheduled Commercial Banks (excluding RRBs)
  • Primary Dealers (PDs)
• NBFCs do NOT have direct access to LAF
• Only a few NBFCs that are designated as PDs may participate

📌 UPSC Trap:
NBFCs are regulated by RBI, but regulation ≠ access to LAF

✅ Statement 2 — Correct

• Foreign Institutional Investors (FIIs / FPIs) are permitted to invest in:
  • Government Securities (G-Secs)
  • Treasury Bills
  • State Development Loans (SDLs)
• Subject to:
  • SEBI registration
  • RBI investment limits (debt ceilings)

📌 This has deepened India’s sovereign bond market and improved liquidity.

✅ Statement 3 — Correct

• SEBI has allowed separate debt trading platforms on stock exchanges
• Objective:
  • Develop corporate bond market
  • Improve transparency and liquidity
• NSE was the first exchange to launch a dedicated debt segment
• Banks are permitted as trading members in this segment

🧩 Concept Map (Quick Recall)

🧘‍♂️ IAS Monk Whisper

In monetary policy, access is power — and RBI guards its windows carefully.