FINANCIAL MARKETS AND SERVICES

1. FINANCIAL MARKEST AND SERVICES

2. CLASSIFICATION OF FINANCIAL MARKETS

3. MONEY MARKET
 Deals with financial assets and securities.
 Have maturity period of up to one year.
 Market for short-term funds.

4. 1. CALL MONEY MARKET
 short-term finance repayable on demand.
 maturity period of one to fourteen days or
overnight to a fortnight.
 Highly liquid.
 The money that is lent for one day in this market
is known as "Call Money",
 if it exceeds one day (but less than 15 days) it
is referred to as "Notice Money".
 Term Money refers to Money lent for 15 days or
more in the Inter Bank Market.

5. PARTICIPANTS IN THE CALL MONEY MARKET:
 Borrowers and Lenders
 scheduled commercial banks (excluding
RRBs), Development Financial Institutions
(DFHI - Discount and Finance House of
India), STCI - Securities Trading Corporation of
India),Co-operative banks (other than Land
Development Banks) and Primary Dealers
(PDs).
 .

6. CMM (CONT…)
 Lenders :
 UTI, LIC, NABARD
 Mumbai, Kolkata, Delhi, Chennai and
Ahmedabad – major place of CMM

7. 2. COMMERCIAL BILLS MARKET
 arises out of a genuine trade transactions.
 A bill of exchange is an important commercial
bill.

8. COMMERCIAL BILLS MARKET (CONT…)
 maturity period of bill may vary from three to
six months.
 DFHI - set up in 1988 – to promote
secondary market in bills.

9. 3. TREASURY BILLS MARKET
 also known as T-bills.
 issued by the central bank on behalf of the
government.
 to curb temporary liquidity shortfalls.
 Like promissory note.
 The minimum amount of bid is Rs. 25000.
 T-bills are issued at a discount, but
redeemed at par.

10. TREASURY BILLS MARKET(CONT…)

11. TREASURY BILLS MARKET(CONT…)

12. 4. SHORT-TERM LOAN MARKET
 To corporate customers to meet working
capital requirements.
 Commercial banks play a major role.
 Provide loan in the form of cash credit and
overdraft.

13. SHORT-TERM LOAN MARKET(CONT…)
Cash credit Overdraft
Given to industrialists Given to Business people
For a period of one year Temporary accommodation
Sanctioned in a separate account Given in current account itself

14. D. FINANCIAL RATES OF RETURN
 Return on Government Securities and bonds
are less.
 Determined by RBI and the Government.
 People in India prefer to invest on physical
assets like land, buildings, gold, silver, etc.
 Investment in financial assets fetches more
rate of return.