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    Money Market: By: Gaurang Badheka Sem - Iii, Mfs

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    Gaurang Badheka
    The document discusses various aspects of the Indian money market, including: 1) It defines the money market as a market for short-term funds and instruments with maturities of less than one year, which provides liquidity and avenues for short-term investment. 2) The major players in the money market are banks, mutual funds, corporate houses, non-banking financial companies, and state governments. 3) Common money market instruments include treasury bills, commercial papers, certificates of deposits, commercial bills, and collateralized borrowing and lending obligations.

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    Money Market: By: Gaurang Badheka Sem - Iii, Mfs

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    Gaurang Badheka
    45 views13 pages
    The document discusses various aspects of the Indian money market, including: 1) It defines the money market as a market for short-term funds and instruments with maturities of less than one year, which provides liquidity and avenues for short-term investment. 2) The major players in the money market are banks, mutual funds, corporate houses, non-banking financial companies, and state governments. 3) Common money market instruments include treasury bills, commercial papers, certificates of deposits, commercial bills, and collateralized borrowing and lending obligations.

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    The document discusses various aspects of the Indian money market, including: 1) It defines the money market as a market for short-term funds and instruments with maturities of less than one year, which provides liquidity and avenues for short-term investment. 2) The major players in the money market are banks, mutual funds, corporate houses, non-banking financial companies, and state governments. 3) Common money market instruments include treasury bills, commercial papers, certificates of deposits, commercial bills, and collateralized borrowing and lending obligations.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    45 views13 pages

    Money Market: By: Gaurang Badheka Sem - Iii, Mfs

    Uploaded by

    Gaurang Badheka
    The document discusses various aspects of the Indian money market, including: 1) It defines the money market as a market for short-term funds and instruments with maturities of less than one year, which provides liquidity and avenues for short-term investment. 2) The major players in the money market are banks, mutual funds, corporate houses, non-banking financial companies, and state governments. 3) Common money market instruments include treasury bills, commercial papers, certificates of deposits, commercial bills, and collateralized borrowing and lending obligations.

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    You are on page 1of 13

    MONEY MARKET

    By : Gaurang Badheka Sem III, MFS

    Meaning of Money Market


    It is a market for overnight to short-term funds and instruments having a maturity period of less than one year.
    It provides balancing mechanism for the equilibrium of the demand and supply of short term funds. Used by the central banks to influence the liquidity position in the market. Provide reasonable avenues for the short term investments by the supplier of funds.

    1. 2. 3.

    Major Players in Money Market


    Reserve Bank of India Banks Mutual funds Corporate houses NBFC State governments Provident Funds Primary Dealers PSUs Discount and Finance House of India

    Money Market Instruments


    1. 2. 3. 4. 5. 6. Treasury bills Call / Notice Money Market Commercial Papers Certificate of Deposits Commercial Bills Collateralised Borrowing and Landing Obligation ( CBLO )

    Treasury Bills
    Treasury Bills are issued by the RBI on behalf of the government to manage short term liquidity. On-tap Bills Ad hoc Bills Auctioned Bills

    Commercial Paper
    A commercial paper is an unsecured short term promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity. Guideline for issuance of CP 1. Eligibility of issuer 2. Rating Requirement 3. Maturity 4. Denomination 5. Limits and amount 6. Issuing and Paying agent ( IPA )

    Contd

    7. Eligible investors 8. Mode of issuance 9. Stand by facility 10. Underwriting 11. Whether all the corporates are automatically be eligible to issue CP 12. Issue of CP in phases 13. Renewal of CP 14. Always with Discount

    Certificate of Deposits
    Certificate of Deposits ( CD ) are unsecured, negotiable, short term instruments in bearer form, issued by commercial banks and DFIs. Guidelines for issuance of CD
    1. 2. 3. 4. 5. Eligibility of issuer Aggregate amount Minimum size of investment Eligibility of investors Maturity

    Contd

    6. Reserve requirements 7. Transferability 8. Loan against CD 9. Payment of CD on maturity 10. Issue of duplicate CD

    Call/Notice Money Market


    For a day Call money For > 1 day but <= 14 days Notice money Mainly used by the banks. It is the interbank landing-borrowing system. The basic objective is to maintain a certain level of liquidity by the banks ( CRR ). RBI and Call money market Call money and other financial markets

    Contd

    Call rate Factors affecting call money rate - liquidity position - reserve requirement - legal aspect - investment policy of lender - developments in other market

    Collateralised Borrowing and Lending Obligations ( CBLO )


    Helps to non-bank entities to deal in money market. This is launched by The Clearing Corporation of India Ltd ( CCIL ) Works in both the form Auction and normal market.

    The Discount and Finance House of India Money Market Mutual Fund

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