SEBI, NISM and IICA sign MoU to Advance Corporate Governance, ESG and Capital Markets

The Business Responsibility and Sustainability Report (BRSR) is a disclosure framework introduced by SEBI to promote transparency in a company’s non-financial performance, particularly in Environmental, Social, and Governance (ESG) areas. ❌ Statement I: Incorrect
* SEBI, not the RBI, mandates the submission of BRSR.
* It applies to the top 1,000 listed companies by market capitalization. ✅ Statement II: Correct
* BRSR disclosures are mostly non-financial and focus on areas like environment, social responsibility, and governance.

India has seen a massive rise in equity options trading and stock market capitalization, but investor protection is actively overseen by SEBI. ✅ Statement I: Correct India leads globally in equity options trading volume, reflecting a major boom in the derivatives market. ✅ Statement II: Correct In early 2024, India's stock market temporarily overtook Hong Kong’s, becoming the 4th largest by market cap. ❌ Statement III: Incorrect India has a regulatory body—SEBI—which issues warnings and acts against unregistered advisors.

Participatory Note (P-Note): This is a financial instrument issued by registered foreign portfolio investors (FPIs) to overseas investors. It allows overseas investors to participate in the Indian stock market indirectly without directly registering with the Securities and Exchange Board of India (SEBI). The FPI holds the underlying Indian securities, and the P-Note represents ownership for the overseas investor. The other options are not used for this purpose: Certificate of Deposit (CD): Issued by banks to raise short-term funds, not related to stock markets. Commercial Paper (CP): Short-term debt instrument issued by companies, not related to foreign investment in stocks. Promissory Note: A written promise to repay a debt, not used in this context of stock market participation.

* Collateral Borrowing and Lending Obligations (CBLO) are instruments of the: C. Money market * CBLO is a money market instrument that facilitates borrowing and lending operations on a collateralized basis. It is used by banks, financial institutions, and other entities to manage their short-term liquidity requirements.

Capital markets are financial markets where long-term securities, such as stocks and bonds, are traded. They provide a platform for raising capital for businesses and governments.  On the other hand, Money markets are financial markets where short-term securities such as T-Bill, C-Paper, Cash Management Bills, Ways and Means advances, etc are traded.  * Statement 1 is correct- Government bonds are long-term debt securities issued by governments to finance their activities. The government bond market is a part of the capital market as it involves the trading of long-term debt securities.  * Statement 2 is incorrect- The call money market is a short-term market where funds are borrowed and lent for very short durations, usually overnight. It deals with short-term funds, and its transactions are not classified as part of the capital market. * Statement 3 is incorrect- Treasury bills are short-term debt instruments issued by governments to finance their short-term cash flow requirements. The treasury bill market, similar to the call money market, deals with short-term instruments and is not considered part of the capital market.  * Statement 4 is correct\- The stock market, also known as the equity market or share market, is where shares or stocks of publicly listed companies are bought and sold. The stock market is a part of the capital market as it involves the trading of ownership interests (equity securities) in companies.

* The beta value of a stock measures how much its price moves compared to the overall market: * Beta > 1: Stock is more volatile than the market (moves more). * Beta < 1: Stock is less volatile than the market (moves less). * Beta = 1: Stock moves in line with the market.

Statement 1 is correct: A portion of household financial savings in India does indeed go towards government borrowings. The government raises funds through various debt instruments like bonds and treasury bills. When households save money, they might invest it in these government debt instruments through banks or other financial institutions. This provides a source of funding for the government while offering a return to the investors (savers). Statement 2 is correct: Dated securities are a major component of India's internal debt. These are essentially government bonds issued at market-determined interest rates through auctions. Investors, including households, banks, and financial institutions, can participate in these auctions and purchase dated securities. Hence, both statements are correct.

The Chairman of public sector banks in India are selected by the Banks Board Bureau (BBB). The Banks Board Bureau is an autonomous body responsible for selecting and appointing the Boards of Directors in Public Sector Banks (PSBs) and Financial Institutions. It was established based on the recommendations of the Nayak Committee Report (2014).

* Exchange-Traded Funds (ETFs): ETFs are baskets of securities (like stocks) that are traded on stock exchanges, similar to individual stocks. They represent a financial instrument. * Motor vehicles: Motor vehicles are tangible assets, not financial instruments. Financial instruments represent claims to assets or cash flows. * Currency swap: A currency swap is a derivative contract where two parties exchange principal and interest payments in different currencies. It is a type of financial instrument. Therefore, only ETFs and currency swaps are considered financial instruments.

Statement 1 is correct: While NBFCs do not have routine, direct access to the Liquidity Adjustment Facility (LAF) like scheduled commercial banks, they can access RBI liquidity indirectly through eligible participants such as Primary Dealers and banks, and through special liquidity windows and RBI operations linked to LAF mechanisms. Statement 2 is correct: Foreign Institutional Investors (now FPIs) are permitted to invest in Government Securities (G-Secs) and Treasury Bills. The RBI has even introduced the Fully Accessible Route (FAR), which allows non-residents to invest in specified government bonds without any investment upper limit. Statement 3 is correct: To develop a robust corporate and government bond market, the RBI and SEBI have permitted Stock Exchanges to set up dedicated debt trading platforms. For example, the NSE's Wholesale Debt Market (WDM) and Retail Debt Market (RDM) provide transparent platforms for these transactions.