Components of Money Market| meaning and features of call money market

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?

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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: