The document summarizes the key aspects of the money market in India. It defines the money market as the market for short-term debt instruments with maturities of up to one year. It then describes the major participants like commercial banks, Reserve Bank of India, development banks, cooperative banks, and indigenous money lenders. The document also outlines the characteristics of the money market and how it consists of organized and unorganized sectors that facilitate short-term lending and borrowing activities.

1. DONE BY
E. SINDHU
M. COM (A&F)
VIDHYA SAGAR WOMEN'S COLLEGE,
CHENGALPAT

2. CONTENTS
•MONEY MARKET MEANING
•EXAMPLE
•CHARACTERISTICS OF MONEY
MARKET
•STRUCTURE OF MONEY MARKET

3. MONENY MARRKET
• The money market refers to trading in very
short-term debt investments. At the
wholesale level, it involves large-volume
trades between institutions and traders.
• At the retail level, it includes money market
mutual funds bought by individual investors
and money market accounts opened by bank
customers.

4. EXAMPLES
• The money market consists of financial
institutions and dealers in money or credit
who wish to either borrow or lend. ...
Examples of eligible assets include auto loans,
credit card receivables, residential/commercial
mortgage loans, mortgage-backed securities
and similar financial assets.

5. CHARACTERISTICS OF MONEY
MARKET
1.Short term funds
2.Maturity period
3.Conversion of cash
4.No Formal place
5.Sub markets
6.Role of market

6. 7. Highly Organized Banking system
8. Existence of secondary Market
9. Demand and supply of funds
10. Wholesale Market
11. Flexibility
12. Presence of a central Bank

7. 1.short Term Fund
It is a market purely for short-term
funds or financial assets called near money.
2. Maturity Period
It deals with financial assets having a
maturity period upto one year only.
3. Conversion of Cash
It deals with only those assets which
can be converted into cash readily without
loss and with minimum transaction cost

8. 4. No Formal Place
Generally, transactions take place
through phone, i.e., oral communication.
Relevant documents and written
communications can be exchanged
subsequently. There is no formal place like
stock exchange as in the case of a capital
market.
•5. Sub-markets
•It is not a single homogeneous market.
•It comprises of several sub-markets each
•specialising in a particular type of financing.

9. E.g., Call Money Market, Acceptance Market,
Bill Market.
6. Role of Market
The components of a money market are
the Central Bank, Commercial Banks, Non-
Banking Financial Companies, Discount
Houses and Acceptance House. Commercial
banks generally play a dominant role in this
market.
7. Highly Organized Banking System
The Commercial Banks are the nerve
centre of the whole money market

10. They are
the principal suppliers of short-term funds.
The commercial banks serve as vital link
between the Central Bank and the various
segments of the money market.
8. Existence of Secondary Market
There should be an active secondary
market for these instruments.
9. Demand and Supply of Funds
There should be a large demand and
supply of short-term funds. It presupposes
the existence of a large domestic and foreign
trade.

11. 10. Wholesale Market
It is a wholesale market and the volume
of funds or financial assets traded in the
market is very large.
11. Flexibility
Due to greater flexibility in the
regulatory framework, there are constant
endeavours for introducing new instruments.
12. Presence of a Central Bank
The central bank keeps their cash
reserves and provides them financial
accommodation in difficulties by discounting
their eligible securities.

12. STRUCTURE OF MONEY MARKET

14. 1.ORGANISED STRUCTRE
• RBI
• When RBI wants to reduce inflation or reduce money
supply in the market,it sales the government securities &
treasury bills to the financial institutions and vice versa.
(ii) Discount Rate or Bank Rate: It is the rate at which RBI
lends money to the commercial banks.
• DFHI
• DFHI was incorporated in March 1988 and it commenced
operation in April 1988. The main objective of this money
market institution is to facilitate smoothening of the short-
term liquidity imbalances by developing an active secondary
market for the money market instruments. Its authorized
capital is Rs. 250 crores

15. •COMMERCIAL BANK
•Commercial banks are at the centre of most money
markets, as both suppliers and users of funds, and in
many markets a few large commercial banks serve
also as middlemen. These banks have a unique place
because it is their role to furnish an important part of
the money supply.
•Examples
1.Public sector banks
2.Private sector banks

16. 1. Public sector
•SBI subsidiary
•
•CO operative Banks
•20 National Banks
2. Private sector
•Indian Banks

17. Development Bank
• Development bank, national or regional financial
institution designed to provide medium- and long-
term capital for productive investment, often
accompanied by technical assistance, in poor
countries.
• Example
• IDBI
• IFCI
• ICICI
• LIC, GIC, UTI, etc.......

18. 2. UNORGANISED SECTOR
1.Indigenous Banks
2.Money Lenders
3.Chits
4.Nidhis

19. 1. INDIGENOUS BANK
•The unorganised sector of the money market is largely made
up of indigenous bankers, money lenders, traders, commission
agents etc., some of whom combine money lending with trade
and other activities. ... In India, the indigenous bankers and
money lenders, traders, are important segment of unorganised
money market.
2. MONEY LENDERS
The money market is an organized exchange market where
participants can lend and borrow short-term, high-quality
debt securities with average maturities of one year or less. It
enables governments, banks, and other large institutions to
sell short-term securities.

20. 3. CHITS
•Investing in a chit fund may result in a profit, but can also
result in a loss. If you win a bid and end up investing more
than what you got, then the chit fund becomes a loan. The
loss can be considered interest payable on the loan.
4. NIDHIS
nidhi company is a type of company in the Indian non-
banking finance sector, recognized under section 406 of the
Companies Act, 2013. Their core business is borrowing and
lending money between their members. They are also
known as Permanent Fund, Benefit Funds, Mutual Benefit
Funds and Mutual Benefit Company.

21. 3.CO OPERATIVE SECTOR
1.State Co operative
•Central Co operative Bank
1. Primary Agricredit sociecties
2. Primary urban Bank
2. State Land development Banks
• Center Lank development Bank
• Primary Land development Bank

22. • Primary Agricredit societies
• A primary credit society refers to any cooperative society
other than a primary agricultural credit society. It is basically
an association of members residing in a particular locality.
The members can be borrowers or non-borrowers.
•Primary Urban Banks
• Contact Details
• Registration Application in schedule A- Signed by all the
share holders.
• Challan copies of the Share amount deposited in DCC Bank.
• List containing the details of Name, Age, Address, Share
amount paid, Share fees, entrance fees.
• 5 copies of Bye-laws.

23. Central Land Development Banks
• Central Land Development Bank (CLDB) These members
of the CLDBs are the PLDBs and a few individual
promoters. It grants long-term loans to agriculturists
through the PLDBs and branches of CLDBs. It raises funds
through floating debentures, which are guaranteed by
the State Government.
• Primary Land development Banks
• Primary Land Development Banks operate at the
district level. Land Development Banks (LDBs) are
also called as Land Mortgage Banks and
Agricultural and Rural Development Banks in some
states. ... It provides institutional credit which assist
in agricultural developmental activities.