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Indian Money Market Detailed Description
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Indian Money Market
By
Gopal Kumar (13DM041)
IMIS,PGDM(2013-2015)
Money Market-Refers to the total financial institutions which deal with short term loans in an economy within a year.
It is entirely different from capital market.
Indian Money MarketOrganised Sector Unorganised Sector
Call Money MarketBill Market Commercial Bill Market Treasury Bill MarketCertificates of Deposit
MarketCommercial Papers
Market
Indigenous Bankers
Money Lenders
Call Money Market:Principle component of IMM. Extremely short period loans. Very short maturity overnight to fourteen days loans.
Purposes:Business purpose between two individuals
To deal in Stock exchange & bullion markets Inter-Bank borrowings To provide greater liquidity
Bill Market: Specializes in sale & purchase of commercial bills & treasury bills.
Features:Post Dated cheques Short-term borrowings(Promissory notes) Issued only by RBI
Certificates of Deposit Market: Negotiated claim issued by the Bank in return for a time deposit.
Features: Most convenient instruments to the depositors.
Offer Maximum liquidity Ideal requirement for BanksCommercial Papers Market: Short-term instrument
for raising fund by corporates.Features:Unsecured Promissory notes of short-
term maturity Driven by the demand for CP by comm.Banks Basically driven by the banks surplus fund position.
Indigenous Bankers: Generally found in rural areas which are untouched with modern banking system.
It include: Chit funds,Private firms/Individuals
Money Lenders: Mostly Confined to small town & Villages Caters to need of farmers, artisans & Small Traders Charge exorbitant interest rates
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