Q.Which of the following money market instruments is issued by the RBI on behalf of the Government of India?

Each money market instrument has a distinct issuer, and the identity of the issuer is exactly what fixes how safe and liquid that instrument is.

Money market instruments differ chiefly in who issues them. Checking each option:

• (a) Commercial Paper — issued by financially strong, creditworthy companies, not the RBI or government.
• (b) Certificate of Deposit — issued by scheduled commercial banks and select financial institutions.
• (c) Treasury Bill — issued by the RBI on behalf of the Government of India, to meet the government's short-term borrowing needs, sold at a discount and redeemed at face value. Correct.
• (d) Commercial Bill — arises from a genuine trade transaction and is drawn by a seller (drawer) on a buyer (drawee), not issued by the government at all.

Confusing a Treasury Bill (issued by the RBI/Government) with a Certificate of Deposit (issued by banks) simply because both are short-term, discount-style instruments — the issuer, not the instrument's general shape, is what the question is really testing.