2.  Definition - As per RBI definitions “
A market for short term financial
assets that are close substitute for
money, facilitates the exchange of
money in primary and secondary
market“.

3.  Market for short-term financial
instruments
 Maturities of one year or less, and
often 30 days or less

4.  Trading takes place in large
financial centres
 Companies and investors often
use money market securities

5.  Money market instruments have
low risk
 Core of the money market
consists of interbank lending

6.  To provide a parking place to employ short-term
surplus funds
 To provide room for overcoming short term
deficits.
 To enable the central bank to influence and
regulate liquidity in the economy through
intervention in this market

7.  Development of trade & industry
 Development of capital market
 Smooth functioning of commercial banks
 Effective central bank control
 Formulation of suitable monetary policy
 Non inflationary source of finance to
government.

8.  ORGANISED STRUCTURE
 1. Reserve bank of India.
 2. DFHI (discount and finance house of India).
 3. Commercial banks
 i. Public sector banks
 SBI with 7 subsidiaries
 Cooperative banks
 20 nationalised banks
 ii. Private banks
 Indian Banks
 Foreign banks
 4. Development bank
 IDBI, IFCI, ICICI, NABARD, LIC, GIC, UTI etc

9.  II. UNORGANISED SECTOR
 1. Indigenous banks
 2 Money lenders
 3. Chits
 4. Nidhis
 III. CO-OPERATIVE SECTOR
 1. State cooperative
 i. Central cooperative banks
 Primary Agri credit societies
 Primary urban banks
 2. State Land development banks
 Central land development banks
 Primary land development banks

10.  Treasury Bills (T-Bills)
 Repurchase Agreements
 Commercial Papers
 Certificate of Deposit
 Banker's Acceptance
 Call money market
 Money Market Mutual Funds

11.  Treasur y Bills –
 Issued by the Indian government in 1917
 They are short-term instruments
 One of the safest money market instruments
 They have 3-month, 6-month and 1-year
maturity periods

12.  Repurchase Agreements –
 Also known as repos
 Repo transactions are allowed only between
RBI-approved securities
 Repurchase agreements are sold by sellers
with a promise

13.  Commercial Papers –
 First issued in the Indian money market in
1990.
 Promissory notes issued by companies and
financial institutions
 Issued at a discounted rate of their face value
 Commercial papers yield higher returns than T-
bills

14.  Cer tificate of Deposit –
 First introduced to the money market of India in
1989.
 A certificate or deposit is a short-term
borrowing note in the form of a certificate
 It usually has a term between 3 months and 5
years
 The funds cannot be withdrawn on demand

15.  Banker's Acceptance –
 The terms for these instruments are usually 90
days, but this period can vary
 Companies use the acceptance as a time draft
for financing

16.  Call money market –
 Maturity period varying from one day to 15 days
 Interest rate paid on call money loans is called
Call Rate

17. Money Market Mutual Funds –
 In 1997, only one MMMF was in operation,
and that too with very small amount of capital
 The RBI has approved the establishment of
very few such funds in India

18.  Purchasing power of your money goes down, in
case of up in inflation
 Absence of integration
 Absence of Bill market
 No contact with foreign Money markets.
 Limited instruments
 Limited secondary market
 Limited participants

19. THANK YOU