New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    Which of the following is the key feature of the

    Security Receipts (SRs) issued by ARCs when acquiring stressed assets?
    A SRs are issued only to individual investors and not institutional investors. Correct Answer Incorrect Answer
    B SRs represent a combination of equity and debt, with high risks involved. Correct Answer Incorrect Answer
    C SRs are always backed by government securities and thus have no risk. Correct Answer Incorrect Answer
    D SRs can only be redeemed if the assets are fully recovered. Correct Answer Incorrect Answer
    E SRs are typically issued for assets that have been securitized. Correct Answer Incorrect Answer

    Solution

    Security Receipts (SRs) are issued by ARCs to represent the value of the assets they acquire. SRs have features of both debt and equity, with unpredictable cash flows. They are typically high-risk instruments and are only redeemed when the underlying assets are recovered.

    Practice Next