Economics · Indian Debt Market Regulations

Consider the following detailed statements regarding the various instruments and regulatory frameworks governing the Government and Corporate Debt Market in India. Statement 1. Treasury Bills are short-term, zero-coupon debt instruments issued by the Central Government of India to manage its short-term liquidity requirements and are currently issued in tenors of 91 days, 182 days, and 364 days. They are issued at a discount to the face value and are redeemed at par, with the difference constituting the interest income for the investor, which is generally considered a sovereign-backed risk-free return. While commercial banks are major investors in T-Bills to meet their Statutory Liquidity Ratio (SLR) requirements, State Governments are strictly prohibited from issuing T-Bills and must instead use State Development Loans or Ways and Means Advances. Statement 2. Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note by highly rated corporate borrowers, primary dealers, and all-India financial institutions to meet their short-term funding needs. Under the current RBI guidelines, CPs can be issued for maturities between a minimum of seven days and a maximum of up to one year from the date of issue. To ensure investor protection, every issuer must obtain a credit rating from a SEBI-registered credit rating agency, and the CP must be issued in a dematerialized form through any of the national depositories like NSDL or CDSL. Statement 3. State Development Loans (SDLs) are dated securities issued by various State Governments through an auction process conducted by the Reserve Bank of India, similar to the issuance of Central Government Securities. Although SDLs are eligible for the Statutory Liquidity Ratio (SLR) and are serviced by the RBI, they typically trade at a yield spread over the Central Government's benchmark securities. This spread reflects the difference in secondary market liquidity and the market's assessment of the fiscal health and debt-sustainability levels of the respective State Government. The RBI conducts regular SDL auctions to provide systematic investment opportunities for institutional participants. Statement 4. The Corporate Bond market in India has been strengthened by the introduction of the Electronic Bidding Platform (EBP) by SEBI to enhance transparency and efficiency in the private placement of debt securities. Currently, any issuer intending to raise funds through the private placement of non-convertible securities exceeding 100 crore rupees in a single financial year must mandatorily use the EBP for the discovery of price. Additionally, the Corporate Debt Market Development Fund (CDMDF) has been operationalized as a backstop facility to purchase investment-grade corporate debt securities during periods of market stress, thereby providing much-needed liquidity and stability to the corporate debt ecosystem. Identify the correct summary of these statements.