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 ?

Question

YESPYQ · Accepted Answer

Correct answer: 2 and 3 only. Statement 1 is incorrect : Liquidity Adjustment Fa- cility(LAF) is monetary policy tool of RBI to inject or absorb liquidity. Under the LAF Scheme, the Reserve Bank will continue to have the discretion to conduct overnight repo or longer term repo auctions at fixed rate or at variable rates depending on mar- ket conditions and other relevant factors. NBFCs generally do not have direct access to the LAF window of the RBI. The LAF is primarily available to scheduled commer- cial banks and primary dealers. While NBFCs can indirectly ben- efit through banks accessing LAF, they cannot access it directly. Primary Dealers (PDs) are eligible to access the Liquidity Adjustment Facility (LAF) of the Reserve Bank of India (RBI). According to RBI guidelines, a non-bank entity intending to op- erate as a Primary Dealer must first register as a Non-Banking Financial Company (NBFC) under Section 45-IA of the RBI Act, 1934. Thus, while NBFCs generally do not have direct access to the LAF, those meeting specific regulatory requirements may be granted access under certain

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