With reference to India, consider the following statements:

1. Retail investors through the Demat account can invest in ‘Treasury Bills’ and ‘Government of India Debt Bonds’ in the primary market.
2. The ‘Negotiated Dealing System Order Matching’ is a government securities trading platform of the Reserve Bank of India.
3. The ‘Central Depository Services Ltd.’ is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.

Which of the statements given above is/are correct?

1. 1 only
2. 1 and 2
3. 3 only
4. 2 and 3

Explanation

Statement 1 is correct

• RBI Retail Direct Scheme allows retail investors to buy and sell government securities (G-sec) online both in the primary and secondary markets. According to details provided by the RBI, small investors can invest in G-Secs by opening a gilt securities account with the RBI. The account opened will be called the Retail Direct Gilt (RDG) Account.

Statement 2 is correct

• NDS-OM is a screen-based electronic anonymous order-matching system for secondary market trading in Government securities owned by RBI. Presently, the membership of the system is open to entities like Banks, Primary Dealers, Insurance Companies, Mutual Funds, etc., i.e., entities that maintain SGL accounts with the RBI. These are Primary Members (PM) of NDS and are permitted by RBI to become members of NDS-OM. Gilt Account Holders who have a gilt account with the PMs are permitted to have indirect access to the NDS-OM system, i.e., they can request their Primary Members to place orders on their behalf on the NDS-OM system.

Statement 3 is incorrect

• Central Depository Services (India) Limited (CDSL) was incorporated at Mumbai on December 12 1997, as a Public Limited Company. It was established to provide convenient, dependable, and secure depository services at an affordable cost to all market participants. CDSL was initially promoted by the BSE Ltd., which thereafter divested its stake to leading banks.
• All leading stock exchanges, like the BSE Ltd. The National Stock Exchange and the Metropolitan Stock Exchange of India have established connectivity with CDSL. It offers other online services such as e-voting, e-Locker National Academy Depository (Electronic Access to Security Information), easiest (Electronic Access to Securities Information and Execution of Secured Transactions), and a mobile application (myeasi m-voting). The company offers services to several sub-sectors of the Indian securities and financial services market, including capital markets, mutual funds, and insurance companies.

Answer: (a) 1 and 2; Difficulty Level: Hard