[amp_mcq option1=”Bonds are privately placed with PDs” option2=”Bonds are issued by the State Government” option3=”Bonds are issued by the RBI as well as the respective State Government” option4=”Bonds are issued by the RBI” correct=”option2″]
The correct answer is: B. Bonds are issued by the State Government.
The State Government issues bonds to raise money for various purposes, such as infrastructure development, social welfare schemes, and debt repayment. The bonds are sold to investors through a process of auction. The interest rate on the bonds is determined by the market conditions and the creditworthiness of the State Government.
The State Government also has the option of issuing bonds through a private placement. This is a process where the bonds are sold to a small group of investors, such as banks and financial institutions. Private placements are usually done when the State Government wants to raise money quickly or when it wants to avoid the scrutiny of the public market.
The RBI does not issue bonds on behalf of the State Government. However, it does play a role in the management of the State Government’s debt. The RBI sets the limits on how much debt the State Government can issue and it also monitors the State Government’s debt levels.
Here is a brief explanation of each option:
- A. Bonds are privately placed with PDs. This option is incorrect because the State Government does not issue bonds privately. The bonds are sold to investors through a process of auction.
- B. Bonds are issued by the State Government. This option is correct. The State Government issues bonds to raise money for various purposes.
- C. Bonds are issued by the RBI as well as the respective State Government. This option is incorrect because the RBI does not issue bonds on behalf of the State Government.
- D. Bonds are issued by the RBI. This option is incorrect because the RBI does not issue bonds on behalf of the State Government.