With reference to the Indian economy, consider the following statements : 1. 'Commercial Paper' is a short-term unsecured promissory note. 2. 'Certificate of Deposit' is a long-term instrument issued by the Reserve Bank of India to a corporation. 3. 'Call Money' is a short-term finance used for interbank transactions. 4. 'Zero-Coupon Bonds' are the interest bearing short-term bonds issued by the Scheduled Commercial Banks to corporations. Which of the statements given above is/are correct ?

The correct answer is Option 3 (1 and 3 only) based on the following analysis of the Money Market instruments:

• Statement 1 is correct: Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. It was introduced in India in 1990 to enable highly rated corporate borrowers to diversify their sources of short-term borrowings.
• Statement 3 is correct: Call Money is a short-term finance repayable on demand, with a maturity period of one day. It is primarily used by banks to maintain their Cash Reserve Ratio (CRR) through interbank transactions.
• Statement 2 is incorrect: A Certificate of Deposit (CD) is a short-term (not long-term) negotiable instrument. It is issued by Scheduled Commercial Banks and select All-India Financial Institutions, not directly by the RBI to corporations.
• Statement 4 is incorrect: Zero-Coupon Bonds are issued at a discount to face value and redeemed at par; they do not bear periodic interest (coupons).