INDIAN MONEY MARKET<br />                                   MADE BY:                                        <br />R ICHA<b...
Money Market<br />As per RBI definitions “ A market for short term financial assets that are close substitute for money, f...
Features of money Market<br />It  is not a single market but a collection of markets for several  instruments. <br />Emplo...
The transactions between borrowers ,lenders and middleman take place through telephone, telegraphs, mail and agents.
No personal contact or presence of the parties is essential for negotiations in a money market. However ,a geographical na...
Significance of Money Market<br />Development of trade & industry.<br /> Development of capital market.<br /> Smooth funct...
BENEFITS OF MONEY MARKET<br />Large number of players<br />Inter –bank market provides basis for growth<br />A liquid mone...
ROLE OF RBI<br />RBI initiated a number of measures in the 'eighties to widen and deepen the money market.The main initiat...
Contd.<br />The primary aim of the Reserve Bank of India's operations in the money market is to ensure that the liquidity ...
Indian money Market<br />Indian money market is a mechanism that involves the lending and borrowing of short term funds<br...
Contd.<br /> In order to study the money market of India in detail, we at first need to understand the parameters around w...
REFORMS IN INDIAN MONEY MARKET<br />     Reform in the Money Market in the Nineties In line with the deregulation and libe...
Structure of Indian Money Market<br />I :-  ORGANISED STRUCTURE<br />1. Reserve bank of India.<br />             2. DFHI (...
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Money markets in_india_wcm

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  • In order to study the money market of India in detail, we at first need to understand the parameters around which the money market in India revolvesThe performance of the Indian Money Market is heavily dependent on real interest rate that is the interest rate that is inflation adjusted. Though the money market is free from interest rate ceilings, structural barriers and other institutional factors can be held responsible for creating distortions in India Money Market. Apart from the call market ratt rates, the other interest rates in the Indian Money Market usually do not change in the short run. It is due to this disparity between es, the other interest rates in the Indian Money Market usually do not change in the short run. It is due to this disparity between the opposite forces that is prevalent in the money market in India that a well defined income path cannot be traced. The Indian Money Market involves a wide range of instruments. Here, maturities range from one day to a year, issued by banks and corporate of various sizes.
  • Money markets in_india_wcm

    1. 1. INDIAN MONEY MARKET<br /> MADE BY: <br />R ICHA<br />
    2. 2. Money Market<br />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<br />Deals with lending and borrowing of Short-Term funds less than a year)<br />It deals with cash substitutes and not exactly cash.<br />Financial instruments with high liquidity and short term maturity are traded.<br />It includes all individuals, Institutions and intermediaries<br />There are money market centers in India at Mumbai, Delhi & Kolkata<br />
    3. 3. Features of money Market<br />It is not a single market but a collection of markets for several instruments. <br />Employs short term surplus funds productively<br />Its principal feature is honour where creditworthiness of the participants is important.<br />Comprises of various sub markets like call market, acceptance market, bill market<br />Components of money markets are commercial banks , Acceptance houses, Non-Baking Financial companies, etc.<br />The main players are:-<br />RBI, DFHI (discount and finance house of india)<br /> Mutual funds , corporate investors, non-banking finance companies(NBFCs) , state governments , primary dealers , securuties trading corporation of india , public sector undertakings(PSUs)<br /><ul><li>It is a need- based market wherein the demand and supply of money shape the market.</li></li></ul><li><ul><li>The Money Market does not refer to a particular place where short term funds are dealt with.
    4. 4. The transactions between borrowers ,lenders and middleman take place through telephone, telegraphs, mail and agents.
    5. 5. No personal contact or presence of the parties is essential for negotiations in a money market. However ,a geographical name may be given to a money market according to its location. for e.gLondon money market operate from lawboard street</li></li></ul><li>Functionsofmoneymarket<br />The money market is generally expected to perform three broad functions:<br />1) It should provide an equilibrating mechanism to even out demand for and supply of short-term funds.<br />2) The money market should provide a focal point for central bankIntervention for influencing liquidity and general level of interest rates in the economy.<br />3) It should provide reasonable access to providers and users ofshort-term funds to fulfill their borrowing and investment requirements<br />
    6. 6. Significance of Money Market<br />Development of trade & industry.<br /> Development of capital market.<br /> Smooth functioning of commercial banks.<br /> Effective central bank control.<br /> Formulation of suitable monetary policy.<br /> Non inflationary source of finance to Government.<br />
    7. 7. BENEFITS OF MONEY MARKET<br />Large number of players<br />Inter –bank market provides basis for growth<br />A liquid money provides effective source of short term finance to borrowers<br />Makes effective monetary policy<br />Facilitates government market borrowing<br />Encourage development of non-bank entities<br />
    8. 8. ROLE OF RBI<br />RBI initiated a number of measures in the 'eighties to widen and deepen the money market.The main initiatives were:<br /> In order to impart liquidity to money market instruments and help the development of secondary market in such instruments, the Discount and Finance House of India (DFHI) was set up as a money market institution jointly by the Reserve Bank of India, public sector banks and financial institutions in 1988.<br /> To increase the range of money market instruments, Commercial Paper, Certificates of Deposit, and Interbank Participation Certificates were introduced in 1988-89. There is a wide range of instruments now.<br />currently, all the money market interest rates are by and large determined by market forces.<br />
    9. 9. Contd.<br />The primary aim of the Reserve Bank of India's operations in the money market is to ensure that the liquidity and short-term interest rates are maintained at levels consistent with the monetary policy objectives of maintaining<br /> price stability<br /> ensuring adequate flow of credit to productive sectors of the economy <br />bringing about orderly conditions in the foreign exchange market. <br />
    10. 10. Indian money Market<br />Indian money market is a mechanism that involves the lending and borrowing of short term funds<br />Reserve Bank of India (central bank of country) is the main component of the money market with vast authority and responsibility<br />Since Globalization of Economy in 1992 Financial institutions have extensively employed various money market instruments for financing in various sectors<br />The performance of Indian money market has been outstanding in past 20 years<br />The RBI has always been playing a major role in regulating and controlling the Indian market by varying CRR, SLR, Repo rates, etc<br />
    11. 11. Contd.<br /> In order to study the money market of India in detail, we at first need to understand the parameters around which the money market in India revolves<br />The performance of the Indian Money Market is heavily dependent on real interest rate that is the interest rate that is inflation adjusted. <br />Though the money market is free from interest rate ceilings, structural barriers and other institutional factors can be held responsible for creating distortions in India Money Market. <br />Apart from the call market ratt rates, the other interest rates in the Indian Money Market usually do not change in the short run. It is due to this disparity between es, the other interest rates in the Indian Money Market usually do not change in the short run. It is due to this disparity between the opposite forces that is prevalent in the money market in India that a well defined income path cannot be traced. <br />The Indian Money Market involves a wide range of instruments. Here, maturities range from one day to a year, issued by banks and corporate of various sizes. <br />
    12. 12. REFORMS IN INDIAN MONEY MARKET<br /> Reform in the Money Market in the Nineties In line with the deregulation and liberalization policies of 'nineties, financial sector reform was undertaken in our country early in the reform cycle.The various reforms in the money market:<br />New Instruments<br />New Participants<br />Changes in the operating procedures ofmonetary policy <br />Fine tuning of liquidity monetary policy<br />Technological infrastructure<br />
    13. 13. Structure of Indian Money Market<br />I :- ORGANISED STRUCTURE<br />1. Reserve bank of India.<br /> 2. DFHI (discount and finance house of India). 3. Commercial banks i. Public sector banks SBI with 6 subsidiaries Cooperative banks 20 nationalized banks ii. Private banks Indian Banks Foreign banks 4. Development bank IDBI, IFCI, ICICI, NABARD, LIC, GIC, UTI.<br />
    14. 14. Contd.<br />UNORGANISED SECTOR<br /> 1. Indigenous banks 2 Money lenders 3 chits <br />III. CO-OPERATIVE SECTOR<br /> 1. State cooperative central cooperative banks Primary Agri credit societies Primary urban banks 2. State Land development banks central land development banks Primary land development banks<br />
    15. 15. INSTRUMENTS IN INDIAN MONEY MARKET<br />Call money / Notice money market –call covernight and short notice(upto 14 days)<br />Commercial paper<br />Certificate of deposit<br />Treasury bills<br />Repurchase agreement<br />Banks acceptance<br />Collateralized borrowing & lending obligation(CBLO)<br />
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