Q. Which one of the following best defines a Standalone Primary Dealer (SPD) in the Indian government securities market?

[A] A financial institution that operates as part of a commercial bank and deals exclusively with government securities.

[B] A financial intermediary authorized by the Reserve Bank of India to buy and sell government securities without being part of a banking institution.

[C] A subsidiary of foreign banks operating under the guidelines of the Reserve Bank of India to deal in equity markets.

[D] A government agency responsible for the regulation and supervision of the securities market.

Answer: B
Notes:

Explanation – Standalone Primary Dealers (SPDs) are specialized entities that operate in the government securities market. They are authorized by the Reserve Bank of India (RBI) to buy and sell government securities, facilitate the government’s borrowing program, and provide liquidity in the secondary market. SPDs operate independently and are not part of a commercial bank or any other financial institution. The Reserve Bank of India (RBI) has recently allowed standalone primary dealers (SPDs) to borrow in foreign currency from their parent companies and entities authorized by it. Standalone primary dealers will also be allowed to access overdraft facilities in nostro accounts solely for operational use.

Source: Forum IAS

Blog
Academy
Community