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 (GSecs). [2024]

Consider the following statements:

In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India.
In India, Foreign Institutional Investors can hold the Government Securities (GSecs).
In India, Stock Exchanges can offer separate trading platforms for debts.

RBI’s website states that Primary Dealers can also access the facility. Since PDs are classified as NBFCs, the statement is correct.

The liquidity-adjustment facility (LAF) is a monetary policy tool used in India since 1998, when it was introduced by the RBI as part of the recommendations of the Narasimham Committee on banking sector reforms. The RBI manages liquidity using tools provided under the LAF and ensures financial stability by offering banks the opportunity to borrow money through repurchase agreements, or repos, or to make loans to the RBI via reverse repo agreements. Since liquidity in the system could be managed by using repo and reverse repo, it can also influence money supply and inflation.

Foreign Institutional Investors (FIIs) can hold Government Securities (G-Secs) in India. The Reserve Bank of India (RBI) introduced the Fully Accessible Route (FAR) in March 2020, allowing foreign investors, including NRIs and OCIs, to invest in specified central government bonds without any investment ceiling.

Stock Exchanges in India can offer separate trading platforms for debt securities. For example, the platform NSE-EBP (Electronic Debt Bidding Platform) was launched to facilitate online bidding for private placement of debt securities.