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Consider the following statements about the Consolidated Sinking Fund:
- The Consolidated Sinking Fund is managed by the Reserve Bank of India.
- The purpose of this fund is to strengthen the crisis response of the Union Government.
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 'A'. Can you explain this answer?
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Verified Answer
Consider the following statements about the Consolidated Sinking Fund:...
- A sinking fund is a kind of fund in which a fixed amount is deposited at a regular interval. So the sinking fund is like a recurring deposit. After some years this fund turns into a huge collection of funds that are further used to repay the previous debt taken by the government or a company.
- It is also called Debt Remittance Fund because the amount deposited in it is used to repay the debt in the future and the government or company does not have to suffer much in repaying the loan in the maturity year of the loan. This is also like a recurring deposit account in the bank.
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- It is also called Debt Remittance Fund because the amount deposited in it is used to repay the debt in the future and the government or company does not have to suffer much in repaying the loan in the maturity year of the loan. This is also like a recurring deposit account in the bank.
Most Upvoted Answer
Consider the following statements about the Consolidated Sinking Fund:...
Consolidated Sinking Fund
• The Consolidated Sinking Fund is a fund managed by the Reserve Bank of India.
• The purpose of this fund is to provide for the redemption of government securities by the Union Government, to strengthen the crisis response of the Union Government.
• The fund is created by setting aside a portion of the annual surpluses of the Union Government.
• The fund is used to redeem loans raised by the government through the issuance of bonds, debentures or other securities.
• The fund is meant to ensure that the government has sufficient resources to meet its debt obligations at all times, even during times of financial stress.
• The fund is managed by the Reserve Bank of India on behalf of the government.
• The fund is governed by the provisions of the Reserve Bank of India Act, 1934.
Therefore, statement 1 is correct, and statement 2 is incorrect as the purpose of the Consolidated Sinking Fund is to provide for the redemption of government securities and not to strengthen crisis response. Hence, the correct answer is option 'A.'
• The Consolidated Sinking Fund is a fund managed by the Reserve Bank of India.
• The purpose of this fund is to provide for the redemption of government securities by the Union Government, to strengthen the crisis response of the Union Government.
• The fund is created by setting aside a portion of the annual surpluses of the Union Government.
• The fund is used to redeem loans raised by the government through the issuance of bonds, debentures or other securities.
• The fund is meant to ensure that the government has sufficient resources to meet its debt obligations at all times, even during times of financial stress.
• The fund is managed by the Reserve Bank of India on behalf of the government.
• The fund is governed by the provisions of the Reserve Bank of India Act, 1934.
Therefore, statement 1 is correct, and statement 2 is incorrect as the purpose of the Consolidated Sinking Fund is to provide for the redemption of government securities and not to strengthen crisis response. Hence, the correct answer is option 'A.'
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Consider the following statements about the Consolidated Sinking Fund: The Consolidated Sinking Fund is managed by the Reserve Bank of India. The purpose of this fund is to strengthen the crisis response of the Union Government.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 'A'. Can you explain this answer?
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