The organized sector of the Indian money market comprises the RBI, Commercial banks, foreign banks, cooperative banks, finance corporations, mutual funds plus the Discount and Finance House of India Limited (DFHI).
Broadly the main constituents on the organized sector on the Indian money market are:
- The decision Money Market: The decision money market exists in most developed money markets. It can be generally the most sensitive perhaps the financial system. Any alteration of flow of funds plus the interest in them is clearly reflected inside.
- The Treasure Bill Market: This market which deals in treasure bills is known as the treasury bills is called the treasury bill market. In India, treasury bills are short-run liability in the Central government. Some important treasury bills which have been utilised in the recent days are : 14 Day Intermediate Treasury Bill, 14 Day Auction Treasury Bills, 91 Day Treasury Bills, 182 Day Treasury Bills, 364 Day Treasury Bills.
- The Repo Market: Repo can be a money market instrument which supports in collateralized short-run borrowing and lending through sale/purchase operations in debt instruments. Repo is the rate which banks borrow from your Federal Reserve Bank, while reverse repo is needed to empty excess cash lying with the banks.
- The Commercial Bill Market: The commercial bill companies are the sub market in which the trade bills or commercial bills are handled. The commercial bill is abill drawn by one Merchant Firm. Generally commercial bills arise out of domestic transactions. The legitimate intent behind an advert bill should be to reimburse the owner while the buyer delays payment.
- The Certificate of Deposit (CD) Market: A Certificate of Deposit (CD) is a certificate from a bank to depositors of funds that stay with deposit in the bank for any specified period. Thus, CD are similar to the traditional term deposits but you are negotiable and tradeable at any given time money markets. RBI introduced CSs with the aim of widening kids of clinking coins market instruments in order to provide investors greater flexibility inside deployment of the short term surplus funds.
- The Commercial Paper Market: The Commercial Paper (CP) can be a short-term instrument of raising funds by corporates. It is essentially sort of unsecured note of hand sold with the issuer to your banker or perhaps a security house. Based on the recommendation of Vaghul Committee, it was introduced from the India Money Market in January 1990. The CP can from a listed Company that features a capital of not less than Rs. Five Crores.
Mutual Funds (MMMF) A scheme of greenbacks market Mutual Funds (MMMF) was introduced by the RBI in April 1992. The reason for the scheme ended up being to offer an additional quick avenue towards the individual investors. The MMME are brought underneath the purview on the SEBI regulation since march, 2000. Banks are now allowed to set up MMMF only like a separate entity such as trust.