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With reference to State Development Loans, consider the following statements
It is used by state governments to raise loans directly from the market.
It is a dated security and is qualified for Statutory Liquidity Ratio (SLR).
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
With reference to State Development Loans, consider the following sta...
Option (c) – Both 1 and 2 is the correct answer.
Statement 1 is correct: State Governments also raise loans from the market which are called SDLs. SDLs are dated securities issued through normal auction similar to the auctions conducted for dated securities issued by the Central Government. Interest is serviced at half-yearly intervals and the principal is repaid on the maturity date. Like dated securities issued by the Central Government, SDLs issued by the State Governments also qualify for SLR. They are also eligible as collaterals for borrowing through market repo as well as borrowing by eligible entities from the RBI under the Liquidity Adjustment Facility (LAF) and special repo conducted under market repo by CCIL.
Statement 2 is correct: Statutory Liquidity Ratio securities (SLR securities) namely:
1) Dated securities of the Government of India issued from time to time under the Market Borrowing Programme and the Market Stabilization Scheme
2) Treasury Bills of the Government of India
3) State Development Loans (SDLs) of the State Governments issued from time to time under the market borrowing programme
Most Upvoted Answer
With reference to State Development Loans, consider the following sta...
Explanation:
State Development Loans (SDLs) are securities issued by state governments in India to raise funds directly from the market. These loans are used by state governments to finance their developmental and infrastructure projects. Let's analyze each statement given in the question to determine their correctness:
Statement 1: It is used by state governments to raise loans directly from the market.
This statement is correct. State Development Loans are instruments through which state governments borrow money directly from the market. These loans are primarily used to meet the financial requirements of the state governments for various developmental activities, such as infrastructure projects, social welfare programs, and other capital expenditure.
Statement 2: It is a dated security and is qualified for Statutory Liquidity Ratio (SLR).
This statement is also correct. State Development Loans are considered as dated securities because they have a fixed maturity date. They are issued in the form of bonds or debentures with a specific tenor. These securities are also eligible to be counted towards the Statutory Liquidity Ratio (SLR) requirements of banks. SLR is a mandatory reserve requirement that mandates banks to maintain a certain percentage of their net demand and time liabilities in the form of liquid assets, including government securities.
Therefore, both statements 1 and 2 are correct.
Conclusion:
State Development Loans (SDLs) are used by state governments to raise loans directly from the market. They are considered as dated securities and are qualified for Statutory Liquidity Ratio (SLR). These loans enable state governments to meet their financial requirements for various developmental projects and are an important source of revenue for the states.
State Development Loans (SDLs) are securities issued by state governments in India to raise funds directly from the market. These loans are used by state governments to finance their developmental and infrastructure projects. Let's analyze each statement given in the question to determine their correctness:
Statement 1: It is used by state governments to raise loans directly from the market.
This statement is correct. State Development Loans are instruments through which state governments borrow money directly from the market. These loans are primarily used to meet the financial requirements of the state governments for various developmental activities, such as infrastructure projects, social welfare programs, and other capital expenditure.
Statement 2: It is a dated security and is qualified for Statutory Liquidity Ratio (SLR).
This statement is also correct. State Development Loans are considered as dated securities because they have a fixed maturity date. They are issued in the form of bonds or debentures with a specific tenor. These securities are also eligible to be counted towards the Statutory Liquidity Ratio (SLR) requirements of banks. SLR is a mandatory reserve requirement that mandates banks to maintain a certain percentage of their net demand and time liabilities in the form of liquid assets, including government securities.
Therefore, both statements 1 and 2 are correct.
Conclusion:
State Development Loans (SDLs) are used by state governments to raise loans directly from the market. They are considered as dated securities and are qualified for Statutory Liquidity Ratio (SLR). These loans enable state governments to meet their financial requirements for various developmental projects and are an important source of revenue for the states.
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With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to State Development Loans, consider the following statements It is used by state governments to raise loans directly from the market. It is a dated security and is qualified for Statutory Liquidity Ratio (SLR). Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
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