Important Facts For Prelims (25th March 2019) | 25 Mar 2019

Gilt Funds

  • Gilt funds are a type of investment fund that invests in gilt securities (fixed-interest generating securities of the central and state governments).
  • Gilts originated in Britain where gilt funds are primarily utilized. However, some Commonwealth nations, such as South Africa and India also use this term.
  • When the Government of India requires funds (or loans), it approaches the Reserve Bank of India (RBI).
    • So, the RBI lends money to the government after taking it from other entities like insurance companies and banks.
    • In return for the loan, the RBI issues government securities having a specific tenure, which the fund manager of gilt fund subscribers. Upon maturity, this gilt fund returns the government securities and receives money in return.
    • Since these are issued by the Governments, they are high-grade securities (government rarely fails financially and there is no risk for losing money), consequently carrying low yields. Because of higher credit ratings (AA), these offer a very low rate, say 4%.
    • Similarly, well-known companies with high credit ratings (AA) also issue bonds but pay low rates.
  • However, these not completely risk-free and are vulnerable to change in interest rates.
    • In fact, for long-term investing, they are the riskiest of all other debt funds available in the market due to their sensitivity to change in interest rates.

Virtual SIM Card

  • Investigating agencies have found that virtual SIM cards (Subscriber Identification Module Cards) were used by the Jaish-e-Muhammad’s terrorists for communications during the Pulwama attack.

What is a Virtual SIM?

  • In this technology, the computer generates a telephone number and the user downloads an application of the service provider on their smartphone.
  • It is a cloud-based number that can be used from any device via an app.
  • All voice calls and SMS text messages directed from/to this virtual phone number are transferred to the Virtual SIM service provider’s network over available data/Wi-Fi connection.