1. Alternative Investment Funds are privately pooled investment vehicles regulated by the Securities and Exchange Board of India.
2. Category III AIFs are not permitted to employ leverage or complex trading strategies.
3. Venture capital funds and social venture funds are generally registered as Category I AIFs.
Which of the statements given above is/are correct?
Statement 1 – Correct: Alternative Investment Funds are privately pooled investment vehicles regulated under the SEBI (Alternative Investment Funds) Regulations, 2012.
Statement 2 – Incorrect: Category III AIFs may employ diverse or complex trading strategies and may use leverage, subject to regulatory conditions.
Statement 3 – Correct: Category I AIFs include funds that invest in socially or economically desirable sectors, such as venture capital funds, SME funds, social venture funds and infrastructure funds.
1. The Social Stock Exchange framework enables eligible social enterprises to raise funds through recognised stock exchanges.
2. Zero Coupon Zero Principal instruments are associated with fundraising by eligible not-for-profit organisations.
3. Social enterprises listed or registered on the Social Stock Exchange are exempt from reporting social impact.
Which of the statements given above is/are correct?
Statement 1 – Correct: SEBI’s Social Stock Exchange framework is meant to enable eligible social enterprises, including not-for-profit organisations, to access fundraising through stock-exchange platforms.
Statement 2 – Correct: Zero Coupon Zero Principal instruments are one of the instruments linked with fundraising by eligible not-for-profit organisations under the Social Stock Exchange framework.
Statement 3 – Incorrect: The framework emphasises transparency, governance and social impact reporting; it does not exempt social enterprises from such reporting requirements.
1. A material alteration made without the consent of parties liable on the instrument may render the instrument void against them.
2. Alteration made to carry out the common intention of the original parties does not invalidate the instrument.
3. Any alteration in a negotiable instrument is valid if it is made before maturity.
Which of the statements given above is/are correct?
Statement 1 – Correct: Section 87 provides that any material alteration of a negotiable instrument renders it void against anyone who was a party to the instrument at the time of alteration and did not consent to it. This prevents a party from being bound by a materially changed obligation without consent.
Statement 2 – Correct: Section 87 expressly protects an alteration made to carry out the common intention of the original parties. Therefore, a correction that merely reflects what the parties originally intended does not invalidate the instrument.
Statement 3 – Incorrect: The validity of alteration is not determined by whether it was made before or after maturity. The relevant test is whether the alteration is material, whether consent was given, and whether it falls within the common-intention exception or another provision recognised by the Act.
1. A cheque crossed generally cannot be paid directly over the counter to the bearer.
2. A holder of an uncrossed cheque may cross it generally or specially after issue.
3. The addition of the words “not negotiable” to a crossed cheque makes the cheque non-transferable.
Which of the statements given above is/are correct?
Statement 1 – Correct: A generally crossed cheque must be paid only to a banker, not directly over the counter.
Statement 2 – Correct: Under the Act, the holder of an uncrossed cheque may cross it generally or specially after issue.
Statement 3 – Incorrect: “Not negotiable” crossing does not make the cheque non-transferable. It means the transferee cannot get a better title than the transferor.
| Column 1 (Instrument) | Column 2 (Primary Issuer) | Column 3 (Key Feature) |
|---|---|---|
| A. Treasury Bills | 1. Central Government | i. Short-term instruments with maturity of less than one year |
| B. State Development Loans | 2. State Governments | ii. Dated securities issued by States |
| C. Cash Management Bills | 3. Reserve Bank of India | iii. Long-term borrowing instrument issued to finance fiscal deficit |
How many of the above are correctly matched?
A – Correctly matched: Treasury Bills are short-term debt instruments of the Government of India and have maturity of less than one year.
B – Correctly matched: State Development Loans are dated securities issued by State Governments.
C – Incorrectly matched: Cash Management Bills are issued by the Central Government, not by the Reserve Bank of India as issuer. They are short-term instruments used to meet temporary cash-flow mismatches, not long-term borrowing instruments.
RBI Explanation: RBI’s official explanation states that the Central Government issues Treasury Bills and dated securities, while State Governments issue dated securities called SDLs.
| Column 1 (Instrument / Concept) | Column 2 (Function) | Column 3 (Position in Policy Corridor) |
|---|---|---|
| A. Standing Deposit Facility | 1. Absorbs liquidity without collateral | i. Lower bound of the LAF corridor |
| B. Marginal Standing Facility | 2. Provides overnight borrowing facility to banks | ii. Upper bound of the LAF corridor |
| C. Policy Repo Rate | 3. Rate at which RBI provides liquidity against collateral | iii. Middle of the LAF corridor |
How many of the above are correctly matched?
A – Correctly matched: The Standing Deposit Facility is used to absorb liquidity and acts as the floor or lower bound of the Liquidity Adjustment Facility corridor.
B – Correctly matched: The Marginal Standing Facility allows banks to borrow from RBI and acts as the ceiling or upper bound of the corridor.
C – Correctly matched: The policy repo rate is placed in the middle of the LAF corridor. RBI’s monetary policy framework places the MSF rate as the upper bound, SDF rate as the lower bound, and policy repo rate in the middle.