What is meant by organised money market, unorganised money market and sub-money market? What is meant by call money market? What are its features?
Contents
Components of Money Market
Following are the main components of money market:
1. Organised Money Market: These institution make dealing in modern system. R. B. I is the apex institutions in this respect. In addition to it State Bank of India, its subsidiary banks, nationalised banker, scheduled and unscheduled bankers are also included in it.
2. Unorganised Money Markets: This is entirely unorganised sector and it includes indigenous bankers, chit funds etc.
3. Sub-Money Markets: The money market comprises a number of sub-markets i.e, various sub-markets are part of money market. The money market is not a single homogeneous market. The following are the main sub markets of a money market:
- Call money market;
- Discount market or commercial bills market;
- Treasury bills market; and
- Acceptance market.
Call Money Market
This market is a market for extremely short period loans i.e. one day to 2 weeks. So it is highly liquid. These markets are associated with the presence of stock exchanges. The interest rate varies from day to day and even from hour to hour and centre to centre.
Loans relating to call money market are repayable on demand. These loans are given to brokers and dealers in stock exchange.
Characteristics of Call Money Market- Following are the characteristics of call money market –
- Call money market is the market of short-term funds.
- In this market credit has to be repaid immediately as and. They are repayable on demand.
- Maturity period of the debt can be 1 to 14 days.
- It is highly liquid market. Liquidity of the credit available in this market is nearly cash.
- Generally market forces determine short call rate.
- These markets are found at major business centres.
Following are the purposes of call loan:
- To maintain liquidity with the RBI;
- To deal in stock exchanges;
- To meet matured bills;
- To activate the call market,
- To save interest on overdraft.
Related Link
- Describe the various types of money
- Dynamic Functions of Money
- Evils or Demerits of Money
- Importance and significance of money in Modern Economy
- Approaches regarding Definitions of Money and its Function
- Money: Meaning, Definitions and features of Money
IMPORTANT LINK
- What is the Exchange Rate System in India?
- Evolution of foreign exchange market in India
- Meaning and importance of export finance.
- Role of Export-Import Bank in Financing India’s Foreign Trade
- How Commercial banks Export Finance to Overseas Importers?
- Explain packing credit in detail?
- What is Post-shipment credit?
- What is Pre-shipment or packing credit?
- Explain Export Credit in India?
- Institutions Providing Finance and Credit Facility for Foreign Trade
- What is Risk Analysis?
- Explain Political risks in detail? and its Types
- What are the types of Risks. Explain in detail?
- Meaning and Types of commercial risks
- How can we minimize foreign trade risks?
- What are Arbitrage operations?
- Difference between Spot Market and Forward Market
- What is spot exchange?
- Agency agreement: Meaning, Features and Advantages
- Functions of Foreign Exchange markets
- structure of Foreign exchange markets
Disclaimer