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LOGO

Money Market InMoney Market InIndiaIndia


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P resentation Pl an

Who : The players

What : Definition

Why: The need

Overview of Financial Market

Which & How: The product & process

Conclusion


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C ompany Logo

Overview of Financia l Market


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1 st Horse: Why

N eed

Regu l ate the l iquidityand interest rates inthe conduct of monetary po l icy toachieve the broadobjective of pricestabi l ity, efficienta ll ocation of creditand a stab l e foreignexchange market

Short termfunds by bank

To keep SLR &CRR asprescribed


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C ompany Logo

Features

Short term in nature

Maturity period < 1 year

Mode of communication

No brokers


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3 .T he Pl ayers

Reserve Bank of India

C ooperative banks ,C ommercia l banks and Dea l ers

Individua l firms ,companiescorporate bodies, canpurchase T B, C D , C P s


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Certificate

of Deposits

Commercialpaper

RepurchaseAgreement T-Bills Call money

Moneymarket


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C ertificate of Deposits

A C D is a time deposit with a bank .

Like most time deposit, funds can notwithdrawn before maturity without paying apena l ty .

C D s have specific maturity date, interest rateand it can be issued in any denomination .

T he main advantage of C D is their safety .

Anyone can earn more than a saving accountinterest .

C ompany Logo


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C ommercia l P aper

1 2 3

CP is a short termunsecured loanissued by acorporationtypically financingday to dayoperation.

CP is very safe

investment becausethe financialsituation of acompany can easilybe predictedover a few months

Only companywith highcredit ratingissuesCPs.


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Repurchase Agreement

.

Repo is a form of overnightborrowing and isused by those

who deal ingovernmentsecurities.

They are usuallyvery short termrepurchasesagreement, fromovernight to 30days of more.

The short term

maturity andgovernmentbacking usuallymean that Reposprovidelenders with

extremely lowrisk.


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T- Bi ll s

I ssued by government of I ndia against short termborrowing requirements with maturity period rangingbetween 14- 364 days.

T- bills are purchased at price less than face value

when they are matured Government pays full value


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T ypes of T- Bi ll s

OrdinaryAd - hoc

On the basis of periodicity9 1 days182 days364 days


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Merits of T- Bi ll s

SafetyLiquidityIdea l short term investment

Idea l fund managementStatutory l iquidity requirementsSource of short term fundNon Inf l ationary monetary too l

Hedging faci l ity


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C a ll Money

The call money market is an integral part of theIndian Money Market, where the day-to-daysurplus funds (mostly of banks) are traded. Theloans are of short-term duration varying from 1to 14 days .

Operations in call money market


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C a ll Money market transactions andparticipants

Commercial banks to meet largepayments

Stock brokers and speculators todeal in stock exchanges

DFH I & STC I to activate the call market

I ndividuals of very high status fortrade purposes


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Advantages Of C a ll money

High liquidity Highprofitability

Maintenanceof

SLR

Safe&

Cheap

Assistanceto

Central bank


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