Correct Option (c)
Statements 2 and 3 are correct.
Statement 2: Treasury bills (T-bills) are short-term money market instruments issued exclusively by the Government of India to meet its short-term funding requirements. State Governments do not issue treasury bills; they raise market borrowings primarily through State Development Loans (SDLs).
Statement 3: Treasury bills are zero-coupon instruments, meaning they do not pay interest directly. Instead, they are issued at a price less than their face value (at a discount) and redeemed at their face value (par value) on maturity. The difference between the issue price and the par value represents the return to the investor.
Incorrect Options
Statement 1 is incorrect. The Reserve Bank of India acts as the debt manager for both the Central Government and State Governments. It manages and services the public debt of both, including Government of India Securities and State Government Securities (State Development Loans).