Money & Banking

1. **Government Bond Market:** Government bonds (like G-Secs) are typically issued with maturities ranging from 1 year to 30 years or even more. These are long-term debt instruments, making the government bond market a part of the **capital market**.
2. **Call Money Market:** This is a market where banks lend to and borrow from each other for very short periods, typically overnight or up to 14 days, to meet their reserve requirements. This is a part of the **money market**.
3. **Treasury Bill Market:** Treasury Bills (T-Bills) are short-term debt instruments issued by the government with maturities of less than one year (currently 91, 182, and 364 days in India). The T-Bill market is a part of the **money market**.
4. **Stock Market:** The stock market deals with equity shares, which represent ownership in a company. Shares are perpetual instruments and represent long-term capital for the company. The stock market is a part of the **capital market**.

Based on this classification, the Government Bond Market (1) and the Stock Market (4) are included in capital markets. This is a total of two markets.

Statement-II states that Central Banks generally assume they have the ability to counteract rising consumer prices via monetary policy means. This is also correct. Controlling inflation and maintaining price stability is one of the primary mandates of most central banks. Monetary policy tools, such as adjusting interest rates, managing liquidity through open market operations, and setting reserve requirements, are designed specifically to influence aggregate demand and inflation. Central banks operate based on the assumption that these tools can effectively manage inflation, although the degree and speed of impact can vary.

Statement-II provides the fundamental reason why central banks resort to actions like interest rate hikes (as mentioned in Statement-I) when faced with rising consumer prices. They raise rates because they believe this monetary policy tool can help bring down inflation. Therefore, Statement-II is the correct explanation for Statement-I.

Statement-II states that InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’ (SARFAESI Act, 2002). InvITs and their underlying Special Purpose Vehicles (SPVs) often borrow funds to finance their infrastructure projects. When they borrow from banks or financial institutions against their assets, they become borrowers. If they default, the lenders can enforce security interests under the SARFAESI Act, which applies to loans secured by immovable assets. Thus, InvITs (or their SPVs through which assets are held) are considered borrowers under the purview of the SARFAESI Act. This statement is correct.