Q. Consider the following statements regarding “Discount and Finance House of India Limited”:
1.It functions as the biggest ‘primary dealer’ in the economy and functions on a commercial basis.
2.It deals with all kinds of instruments in the money market with an upper ceiling.
Which of the statements given above is/are incorrect?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B
Notes:

Explanation: The Discount and Finance House of India Limited 13 (DFHI) was set up in April 1988 by the RBI jointly with the public sector banks and financial investment institutions (i.e., LIC, GIC and UTI).

  • In 2004, the RBI transferred its total holding in the DFHI to the State Bank of India arm SBI Gilts Limited. Its new name is SBI DFHI.
  • It functions as the biggest ‘primary dealer’ in the economy and functions on a commercial basis.
  • It deals in all kinds of instruments in the money market without any upper ceiling.
  • Operating in ‘two way’ (as a lender and borrower) its objective is to provide needful liquidity and stability in the financial market of the country.

Source: Ramesh Singh

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