Economics • Banking & FinanceHard
In the context of the Indian banking architecture, what does the term 'Bumper Issue' or 'Anchor Investor' typically relate to in financial markets?
A. Institutional investors invited to subscribe to shares ahead of an IPO to instill market confidence✓ Correct Answer
B. Emergency liquidity windows operated by the central bank during periods of severe banking panics
C. Specialized bonds issued by public sector banks to recapitalize distressed asset portfolios
D. Government securities sold exclusively to foreign central banks to stabilize bilateral exchange rates
💡 Solution & Explanation
An anchor investor refers to a qualified institutional buyer invited to subscribe to shares ahead of a public issue to instill market confidence and assure retail investors about the company fundamentals. This mechanism was introduced by SEBI to stabilize the initial price discovery process in public offerings. Other options describing emergency central bank liquidity or public sector recapitalization bonds do not fit this definition.
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