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    Question

    According to the RBI notification, which government securities are eligible for lending and borrowing in Government Securities Lending (GSL) transactions?

    A Only Treasury Bills issued by the central government Correct Answer Incorrect Answer
    B Only government securities issued by state governments Correct Answer Incorrect Answer
    C Both government securities issued by the central government (excluding Treasury Bills) Correct Answer Incorrect Answer
    D Only Treasury Bills issued by state governments Correct Answer Incorrect Answer
    E All government securities issued by the central and state governments Correct Answer Incorrect Answer

    Solution

    The Reserve Bank of India (RBI) has implemented the Government Securities Lending Directions, 2023, effective immediately. The initiative was closely associated with the lending and borrowing of government bonds by insurance companies. Given the substantial holdings of government bonds by insurers, this move is expected to lead to increased liquidity, enhance operational efficiency, and contribute to more efficient price discovery.As outlined in the notification by the RBI, government securities issued by the central government (excluding Treasury Bills) are eligible for lending and borrowing in Government Securities Lending (GSL) transactions. Furthermore, both government securities issued by the central government (including Treasury Bills) and those issued by state governments are eligible for use as collateral in GSL transactions.

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