Q. 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:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Correct answer: (d) 1, 2 and 3
Question from UPSC Prelims 2024 GS Paper
Explanation:
1. Insurance Companies:
Insurance companies in India are allowed to trade in both Corporate Bonds and Government Securities. In fact, they are significant investors in these instruments as part of their investment portfolio management.
2. Pension Funds:
Pension funds in India, including the National Pension System (NPS) and other retirement funds, are permitted to invest in both Corporate Bonds and Government Securities. These investments form a crucial part of their portfolio allocation strategy.
3. Retail Investors:
Retail investors in India can also participate in trading both Corporate Bonds and Government Securities. The Reserve Bank of India (RBI) has taken steps to increase retail participation in the government securities market through various initiatives, including the “RBI Retail Direct” scheme launched in 2021. For corporate bonds, retail investors can trade through stock exchanges or participate in public issues of bonds.
Therefore, the correct answer is (d) 1, 2 and 3.