Correct Option (D):
All three categories of entities are permitted to trade in Corporate Bonds and Government Securities in India:
- Insurance Companies: Regulated by the IRDAI, insurance companies are significant institutional investors in both Government Securities (G-Secs) and Corporate Bonds. Their investments are crucial for managing long-term liabilities and ensuring solvency, as per regulatory guidelines.
- Pension Funds: Pension funds, including provident funds and superannuation funds, are mandated by regulations to invest a portion of their corpus in G-Secs and Corporate Bonds. This strategy aims to ensure capital preservation and generate stable, long-term returns for their beneficiaries.
- Retail Investors: Individual investors gained direct access to Government Securities through the RBI Retail Direct Scheme, launched in 2021. Furthermore, retail investors can access corporate bonds through various platforms, including stock exchanges and other regulated financial intermediaries.
Incorrect Options:
Options (1), (2), and (3) are incorrect because they exclude one or more categories of investors who are permitted to trade in corporate bonds and government securities under the current regulatory framework in India. The present investment landscape allows participation from institutional investors like insurance companies and pension funds, as well as individual retail investors.