Indian Money Market

K. J.
SOMAIYA COLLEGE OF ARTS & COMMERCE

(AUTONOMUS)
VIDYAVIHAR (EAST), MUMBAI 400077
PROJECT ON:
THE STUDY ON INDIAN MONEY MARKET
BACHELOR OF COMMERCE (BANKING AND INSURANCE)
SEMSTER V
(2015-2016)
Submitted
In Part Fulfillment of the Requirement
For the Award of Degree of
Bachelor of Commerce Banking & Insurance
By
PARTH MUKESH SHAH
ROLL NO. 92
K. J. SOMAIYA COLLEGE OF ARTS & COMMERCE

(AUTONOMOUS)
VIDYAVIHAR (EAST), MUMBAI 400077
CERTIFICATE
This to certify that MR. PARTH MUKESH SHAH Roll No: 92 Student of K.J.Somaiya College of
Arts & Commerce (B.COM - BANKING AND INSURANCE) SEMESTER V (2015-2016) has
successfully completed the project on THE STUDY ON INDIAN MONEY MARKET under the
guidance of MRS. JINAL DOSHI
__________________
______________________
Prof. JINAL DOSHI
DR. (Smt.) SUDHA VYAS
(PROJECT GUIDE)
(PRINCIPAL)
_______________________
Prof. MILIND SARAF
(COURSE CO-ORDINATOR)
____________________
EXTERNAL EXAMINER
DECLARATION
I MR. PARTH MUKESH SHAH The student of B.COM BANKING &

INSURANCE SEMESTERV (2015-2016) hereby declares that I have completed
project on THE STUDY ON INDIAN MONEY MARKET. Whenever the
data/information have been taken from books Or other sources the same have been
mentioned in bibliography. The information submitted is true and original to the best of
my Knowledge.
Students Signature
_________________________
MR.PARTH M SHAH
(Roll No.92)
ACKNOWLEDGEMENT
On the event of completion of my project THE STUDY ON INDIAN MONEY MARKET.

I take the opportunity to express my deep sense of gratitude towards all those people without
whose guidance, inspiration, & timely help this project would have never seen the light of day.
Heartily thanks to Mumbai University for giving me the opportunity to work on this project. I
would also like to thank our principal Dr. (Smt) SUDHA VYAS for giving us the brilliant opportunity
to work on this project.
I find great pleasure in expressing my deepest sense of gratitude towards my project guide MRS.
JINAL DOSHI, whose guidance & inspiration right from the conceptualization to the finishing stages
proved to be very essential & valuable in the completion of the completion of the project and my Cocoordinator MR. MILIND SARAF , for their help and valuable support throughout the
term of the project. It was a learning experience to work under his guidance.
Lastly, I would also like to thank the Faculty Member and Staff Member of K.J.
SOMAIYA COLLEGE OF ARTS & COMMERCE for their kind support and Help during
the Project.
(Students Signature)
___________________
Mr. PARTH M. SHAH
THE STUDY ON
INDIAN MONEY MARKET
Executive Summary
In India the money market plays a vital role in the progress of economy. But,
it is not well developed when compared to American and London money
markets. In this market short-term funds are borrowed and lent among
participants permitted by RBI.
Money Market ensures that institutions which have surplus funds earn certain
returns on the surplus. Otherwise these funds will be idle with the
institutions. Similarly, the money market ensures funds for the needy at
reasonable interest. This way liquidity position is assured by money market
operations.
Let us now discuss the various money market instruments in India. In India
the Money Market is regulated by RBI. Hence, the instruments traded and the
players in the market require to be approved by RBI
Table of Content
Sr.no
1.
Particulars
Pg.no
Introduction
1.1.
1.2.
1.3.
1.4.
1.5.
Objectives of Money Market

Review of Literature
Methodology
Limitations of the Study
Objectives of the Study
4
6
11
11
2.
Meaning of Money Market
12
2.1. Definition of Money Market
13
2.2. History of Indian Money Market
14
2.3. Types of Money Market Instruments
17
2.4. Structure of Indian Money Market
18
2.5. Primary Dealers
38
2.6. The Role of RBI
40
2.7. The Growth of Money Market in India
43
2.8. Scope of Indian Money Market
45
Sr.no
3.
Particulars
Pg.no
Features /Characteristics of Indian Money Market
47
3.1. Participants in the Money Market
49
3.2. Importance of Indian Money Market
55
3.3. Benefits / Advantages of Money Market
59
3.4. Defects / Drawbacks of Indian Money Market
60
Findings & Suggestions
64
4.1. Findings
64
4.2. Suggestions
65
5.
Conclusion
67
6.
Webliography
68
7.
Bibliography
69
4.
Table of Content
1. Introduction
The seventh largest and second most populous country in the world, India has long been
considered a country of unrealized potential. A new spirit of
economic freedom is now stirring in the country, bringing
sweeping changes in its wake. A series of ambitious
economic reforms aimed at deregulating the country and
stimulating foreign investment has moved India firmly into
the front ranks of the rapidly growing Asia Pacific region
and unleashed the latent strengths of a complex and rapidly changing nation.
India's process of economic reform is firmly rooted in a
political consensus that spans her diverse political
parties. India's democracy is a known and stable factor,
which has taken deep roots over nearly half a century.
Importantly, India has no fundamental conflict between
its political and economic systems. Its political
institutions have fostered an open society with strong
collective and individual rights and an environment
supportive of free economic enterprise.
Long term investments. These include a free and vibrant India's time tested institutions
offer foreign investors a transparent environment that guarantees the security of their
press, a judiciary which can and does overrule the government, a sophisticated legal and
accounting system and a user friendly intellectual infrastructure. India's dynamic and
highly competitive private sector has long been the backbone of its economic activity. It
accounts for over 75% of its Gross Domestic Product and offers considerable scope for
joint ventures and collaborations.
Today, India is one of the most exciting emerging money markets in the world. Skilled
managerial and technical manpower that match
the best available in the world and a middle
class whose size exceeds the population of the
USA or the European Union, provide India with
a distinct cutting edge in global competition.
The average turnover of the money market in
India is over Rs. 40,000 crores daily. This is
more than 3 percents of the total money supply
in the Indian economy and 6 percent of the total
funds that commercial banks have let out to the
system. This implies that 2 percent of the annual
GDP of India gets traded in the money market in just one day. Even though the money
market is many times larger than the capital market, it is not even fraction of the daily
trading in developed markets.
1.1 Objectives of Money Market

Money market is an important part of the economy. It plays very significant
functions. As mentioned above it is basically a market for short term monetary
transactions. Thus it has to provide facility for adjusting liquidity to the banks,
business corporations, non-banking financial institutions (NBFs) and other
financial institutions along with investors.
A well developed money market serves the following objectives:
Providing an equilibrium mechanism for ironing out short-term surplus and
deficits.
It means to keep a balance between the
demand for and supply of money for short term

monetary transactions.
Providing a focal point for central bank intervention
for the influencing liquidity in the economy.
Providing access to users of short-term money to meet
their requirements at a
Reasonable price
To promote economic growth. Money market can do this by making funds

available to various units in the economy such as agriculture, small scale
industries, etc.
To provide help to Trade and Industry. Money market
provides adequate finance to trade and industry.
Similarly it also provides facility of discounting bills
of exchange for trade and industry.
To help in implementing Monetary Policy. It provides
a mechanism for an effective implementation of the monetary policy.
1.2 Review of Literature
Article: India call money ends

near reverse repo rate, cash ample
Reuters,2/ 9/ 2009, Indian overnight money rates brought down to near the reverse
repo rate of 3.25% on Wednesday as this cash surplus in the system will help banks
meet their reserve needs comfortably. Cheaper money available at the
collateralized borrowing and lending obligation (CBLO) also eased pressure on the
inter-bank cash rates. At that day banks were guided to report their position to RBI
once in two weeks. This amendment crated an expectation on liquidity resistance.
Some analysts said the central bank may start rolling back the liquidity as early as
December 2009, as the already pressured consumer prices could pose significant
inflationary threat to the economy, amid easy cash conditions Overnight rates are
supported around the reverse repo rate because banks holding surplus funds could
also deploy the same with central bank at that rate in its daily liquidity adjustment
auctions.
Article: Money Market Integration in India: A Time Series Study

Rastogi Nikhil Says Indian financial markets have come a long way from the
highly controlled pre-liberalization era. He signifies that the main focus is on
achieving efficiency, which is the hallmark of any developed financial market. This
research paper tests the efficiency and extent of integration between financial
markets empirically at the short end of the market. The rates, mainly taken for the
purpose of this study, comprise the call market rate, CD (Certificate of Deposit)
rate, CP (Commercial Paper) rate, 91-day T-bill (Treasury bill) rate and 3-month
Forward premium. The results, though promising, are mixed. In his research he
concluded that although markets have achieved integration in some of its branches,
they have still to achieve full integration. This has absolute implications on the
monetary policy of the Reserve Bank of India. (RBI) since changes in one market
(gilt market) can be used to regulate the other market (forex market).
Article: Market efficiency and financial markets integration in India
Prusty Sadananda, June, 2007, the author explored the impact of economic reforms
on the integration of various segments of the financial market in India through the
time series tools during the period from March 2006 to March 2012. The major
findings were: (i) various segments of the financial market in India have achieved
market efficiency, (ii) the 91-day Treasury bill rate is the appropriate 'reference
rate' of the financial sector in India, (iii) the financial markets in India are largely
integrated at the short-end of the market, and (iv) the long- end of the market is
integrated with the short-end of the market. The above findings suggest that
monetary policy should rely more on interest rate and asset price channels to
control inflation.
6
1.3 Methodology
(A) Primary Data: - (Questionnaire)
Questionnaire for Indian Money Market
Name:
Age:
Gender:
Contact No.
Profession:
1) What is your annual income?

below 1 lakhs
between 1 lakhs- 3 lakhs
between 3 lakhs- 5 lakhs
above 5 lakhs
2) How do you invest your savings?

Deposits in Banks
Invest in Real Estate
Invest in Capital Market
Invest in Money Market Mutual Funds
3) Do you have any knowledge about Money Market Instruments?

Yes
No
Heard but not know
4) How long would you like to hold your Money Market Instruments?
Long term period
Short term period
5) How much risk would you be willing to take?

Low
Average
Medium
High
6) In your opinion, what is expected rate of return in a year?

below 10 %
between 10 % - 20%
between 20% - 30%
above 30%.
7) How would rate your experience with Indian Money Market?

Poor
Average
Good
Excellent
8) Is recession had affected your investment decision?

Yes
No
Sampling objective: To find out individual investors for the age group of 18 -55 years.
Sampling area: Navi Mumbai
No of People Sampled : 40
Particulars
No. of investors
Deposits in Banks
13
Investment in
07
Real Estate
Investment in
11
Capital Market
Investment in
09
Money Market
The
above
pie
diagram show how the pattern of investment of saving by individual investors in various
field of investment
Risk Involvement
No. of Investors
Low
03
10
Average
05
Medium
15
High
17
1.4 Limitations of the Study:-
11
The study is based on a limited scope of area

Whole market cannot be studied.
1.5 OJECTIVES OF THE STUDY:The main objectives of this project are the following:
To study about INDIAN MONEY MORKETAND its related aspects like its
types and instruments.
To study about INDIAN MONEY MARKET its related aspect history,
organizational structure, participants.
To find out the investors savings preferences.
12
2.
Meaning of Money Market
Money market refers to the market where money and highly liquid marketable
securities are bought and sold having a maturity period of one or less than one
year. It is not a place like the stock market but an activity conducted by telephone.
The money market constitutes a very important segment of the Indian financial
system. The highly liquid marketable securities are also called as money market
instruments like treasury bills, government securities, commercial paper,
certificates of deposit, call money, repurchase agreements etc.
The major player in the money market are Reserve
Bank of India (RBI), Discount and Finance House of
India (DFHI), banks, financial institutions, mutual
funds, government, big corporate houses. The basic aim
of dealing in money market instruments is to fill the gap
of short-term liquidity problems or to deploy the short-term surplus to gain income
on that.
The money market is a market for
lending and borrowing of short-term
funds.
Money market deals in funds and
financial instrument having a maturity
period of one day to one year.
The instruments in the money market
are close substitutes for money as they
are of short-term nature and highly liquid.
13
2.1 Definition of Money Market

According to the McGraw Hill Dictionary of Modern Economics, money market
is the term designed to include the financial institutions which handle the purchase,
sale, and transfers of short term credit instruments. The money market includes the
entire machinery for the channelizing of short-term funds. Concerned primarily
with small business needs for working capital, individuals borrowings, and
government short term obligations, it differs from the long term or capital market
which devotes its attention to dealings in bonds, corporate stock and mortgage
credit.
Following definitions will help us to understand the concept of money market.
According to the Reserve Bank of India, money market is the centre for dealing,
mainly of short term character, in money assets; it meets the short term
requirements of borrowings and provides liquidity or cash to the lenders. It is the
place where short term surplus investible funds at the disposal of financial and
other institutions and individuals are bid by borrowers agents comprising
institutions and individuals and also the government itself.
According to Crowther, "The money market is a name given to the various firms
and institutions that deal in the various grades of near money."
These definitions help us to identify the basic characteristics of a money market. A
money market comprises of a well organized banking system. Various financial
instruments are used for transactions in a money market. There is perfect mobility
of funds in a money market. The transactions in a money market are of short term
nature.
14
2.2 History of Indian Money Market

Till 1935, when the RBI was set up the Indian money market remained highly
disintegrated, unorganized, narrow, shallow and therefore, very backward. The
planned economic development that commenced in the year 1951 market an
important beginning in the annals of the Indian money market. The nationalization
of banks in 1969, setting up of various committees such as the Sukhmoy
Chakravarty Committee (1982), the Vaghul working group (1986), the setting up of
discount and finance house of India ltd. (1988), the securities trading corporation
of India (1994) and the commencement of liberalization and globalization process
in 1991 gave a further fillip for the integrated and efficient development of India
money market.
Recommendations of Three Committees

The issue of whether non-bank participants should constitute part of
call/notice/term money market could be traced first in the Report of the Committee
to Review the Working of the Monetary System (Chairman: S. Chakravarty) in
1985. Since then, the Report of the Working Group on the Money Market
(Chairman : N. Vaghul) in 1987 and the Report of the Committee on Banking
Sector Reforms (Chairman : M. Narasimham) in 1998 had also deliberated on this
issue. It needs to be appreciated that the particular set of recommendations from
these three Committees have to be assessed against the specific objectives for
which these Committees had been constituted as well as the differing initial
conditions reflecting the state of Indian financial market which were prevailing at
that particular point of time.
15
Sukhmoy Chakravarty Committee

The call money market for India was first recommended by the Sukhmoy
Chakravarty .Committee was set up in 1982 to review the working of the monetary
system. They felt that allowing additional non-bank participants into the call
market would not dilute the strength of monetary regulation by the RBI, as
resources from non-bank participants do not represent any additional resource for
the system as a whole, and their participation in call money market would only
imply a redistribution of existing resources from one participant to another. In view
of this, the Chakravarty Committee recommended that additional nonbank
participants may be allowed to participate in call money market.
The Vaghul Committee

The Vaghul Committee (1990), while recommending the introduction of a number
of money market instruments to broaden and deepen the money market,
recommended that the call markets should be restricted to banks. The other
participants could choose from the new money market instruments, for their short
-term requirements. One of the reasons the committee ascribed to keeping the call
markets as pure inter-bank markets was the distortions that would arise in an
environment where deposit rates were regulated, while call rates were market
determined.
16
The Narasimham Committee

The Narasimham Committee II (1998) concurred with the Vaghul Committee as it
also observed that call/notice/term money market in India, like in most other
developed markets, should be strictly restricted to banks. It, however, felt that
exception should be made for Primary Dealers (PDs) who have been acting as
market makers in the call money market and are formally treated as banks for the
purpose of their inter-bank transactions and, therefore, they should remain as part
of call money market. With regard to non-banks, it expressed concern that these
participants "are not subjected to reserve requirements and the market is
characterized by chronic lenders and chronic borrowers and there are heavy
gyrations in the market". It felt that allowing non-bank participants in the call
market "has not led to the development of a stable market with liquidity and depth
and the time has come to undertake a basic restructuring of call money market".
Like the Vaghul Committee, it had also suggested that the non-bank participants
should be given full access to bill rediscounting, Commercial Paper (CP),
Certificates of Deposit (CDs), Treasury Bills (TBs) and Money Market Mutual
Funds (MMMFs) for deploying their short-term surpluses
17
2.3 Types of Money Market Instruments:-
Financial
Financial
market
market
Money
Money
market
market
Capital
Capital
market
market
18
2.4 Structure of Indian Money Market - Chart

The entire money market in India can be divided into two parts. They are
organized money market and the unorganized money market. The unorganized
money market can also be known as an unauthorized money market. Both of these
components comprise several constituents. The following chart will help you in
understanding the organizational structure of the Indian money market.
19
Structure
The Indian money market consists of two main sectors:
1) ORGANISED SECTOR:
The RBI is the apex institution that controls and monitors all the
organizations in the organized sector.
Also, the organized money market is composed of various
components/ instruments that are highly liquid in nature.
The instruments traded are call money, treasury bills, commercial bills,
certificate of deposits, commercial papers, repos etc.
The organized money market is further diversified with the establishment of
the Discount and finance House of India, and Money market Mutual Funds.
The Instruments of the Organized Money Market Are:-
20
i) CALL MONEY AND NOTICE MONEY MARKET:

The call money market is the most important segment of the Indian money
market. It is also called as inter-bank call money market.
Under call money market, funds are transacted on an over-night. Generally,
banks rely on call money market
where they raise funds for a
single day.
The notice money market funds
are transacted for a period of 2 to
14 days. The loans are to be
repaid at the option of either the
lender or the borrower.
The rate at which funds are borrowed / lent in this market is called the call
money rate.
The main participants in the call money market are
commercial banks (excluding RRBs), co-operative
banks and primary dealers.
The Discount and finance House of India and nonbanking financial institutions like LIC, GIC, UTI,
NABARD, etc, also participate in the call money market.
Call money markets are generally concentrated in large commercial centre
like Mumbai, Delhi, Chennai, Kolkata and Ahmadabad.
21
The RBI intervenes in the call money market because it is highly sensitive
and it is the indicator of liquidity position in the organized money market.
The call money rate (that depends on depends on demand for and supply of
funds) is highly variable from day to day and from centre to centre.
ii) TREASURY BILLS MARKET:

22
Treasury bills are short-term securities issued by the RBI on behalf of the
Government of India.
Treasury bills are of three types: 91 day treasury bills, 182 days treasury bills
and 364 day treasury bills.
Since these bills are issued through auctions, interest rates on all types of
treasury bills are determined by market forces.
Treasury bills are highly liquid and are readily available.
They give assured yields at a low transaction cost.
Treasury Bills are eligible for inclusion in the SLR.
Moreover, they have negligible capital depreciation.
Treasury Bills are available for a minimum amount of Rs 25000 and in
multiples of RS 25000.
Treasury Bills are traded in the secondary market. Commercial banks, Primary
Dealers, Mutual Funds, Corporate, and Financial Institutions, Provident /
Pension funds and Insurance companies participate in the treasury Bills
Market.
23
However Treasury Bills Market in India is very narrow and undeveloped.
iii) COMMERCIAL BILLS:

A commercial bill is a short- term, negotiable, selfliquidating instrument drawn
by the seller on the buyer for the value of goods delivered by him.
24
Such bills are called trade bills / bills of exchange and when they are
accepted by banks, they are called commercial bills.
Generally the bill is payable at a future date (mostly, the maturity period is
up to 90 days).
During this period, the seller may discount the bill with the banks. The
commercial banks may rediscount these bills with FIs like EXIM bank,
SIDBI, IDBI, etc.
Thus, commercial bills are very important for providing short-term credit to
trade and commerce.
iv) CERTIFICATES OF DEPOSITS: (CDs)

Certificates of Deposits are unsecured, negotiable promissory notes issued
by commercial banks and development financial institutions.
25
CDs are marketable receipts of funds deposited in a bank for a fixed period
at a specified rate of interest.
They are highly liquid and riskless money market instruments.
CDs were originally introduced in India to enable commercial banks to raise
funds from the market.
The RBI has modified its original scheme for CDs. the following are the recent
guidelines for the issue of CDs:a. ELIGIBILITY: CDs can be issued by commercial banks (except RRBs and
Local Area Banks) and financial institutions that have been permitted to
raise short-term loans by RBI.
26
b. AMOUNT: while banks can issue CDs depending on the requirements,

financial institutions can issue CDs within the limit fixed by the RBI.
c. MINIMUM SIZE: the minimum size of an issue for a single investor is Rs
1 lakh and it can be increased in multiples of Rs 1 lakh.
d. DISCOUNT RATE: CDs are issued at a discount to face value. Bank /
Financial institutions are free to determine discount rates on floating rate
basis.
e. INVESTORS: CDs are issued to individuals, corporations, companies,
trusts, etc.
f. TRANSFERABILITY: CDs are freely transferable by endorsements /
delivery. However demitted CDs have to transfer as per specified
procedures. There is no lock-in period for CDs.
g. MATURITY: Commercial banks can issue CDs with a maturity period
between 7 days to 1year. Financial institutions can issue CDs with amaturity
period between 1 year to 3 years.
h. RESERVE REQUIREMENTS: CDs are subject to CRR and SLR since
banks have to report CDs to RBI.
i. LOANS / BUY-BACK: Commercial banks / FIs cannot give loans against
CDs. Similarly, they cannot buy-back their own CDs before maturity period.
j. FORMAT: Banks /FIs should issue CDs only in the dematerialized form.
However, investors have the option to seek CDs in physical form.
27
Due to absence of a well-developed secondary market in CDs, the size of

CD market in India is quite small.
v) COMMERCIAL PAPERS:
28
Commercial paper is an unsecured, highly liquid money market instrument

in the form of a promissory note / a dematerialized form through any of the
depositories registered with SEBI.
It has fixed maturity whereby the purchaser is promised a fixed amount at a
future date.
Commercial papers are issued by leading nationally reputed manufacturing
and finance companies (Public / private sector).
They are issued on a discount to face value.
Commercial papers are issued (by corporate / primary dealers / all India
financial institutions) on the following conditions:
a) The tangible net worth of the issuing
company should not be less than RS4 crores.
b) The working capital limit of the company has
been sanctioned by banks /financial institution.
c) The borrowal a/c of the company is rated as
a standard asset by banks /financial institutions.
All eligible participants should have a
minimum rating P2 from CRISIL.
Commercial Papers have maturity period
between 7days and 1year from the date of issue.
29
CPs are issued in denominations of Rs 5 lakhs (minimum) or multiples of

Rs5 lakhs.
Individuals, banks, corporate bodies, NRIs and FIIs can invest in
commercial papers.
Every issuer must appoint an IPA (Issuing and Paying Agent) for issuance of
commercial papers. Only a scheduled commercial bank can act as an IPA.
vi) REPOS AND REVERSE REPOS:
30
The RBI achieves the function of maintaining liquidity in the money market
through REPOS / REVERSE REPOS.
The repo / reverse repo is a
very important money market
instrument to facilitate shortterm liquidity adjustment
among banks, financial
institutions and other money
market players.
A repo / reverse repo is a
transaction in which two
parties agree to sell and
repurchase the same security at a mutually decided future date and price.
From the sellers point of view, the transaction is called a repo; whereby the
seller gets immediate funds by selling the securities with an agreement to
repurchase the same at a future date.
Similarly, from the buyers point of view, the transaction is called a reverse
repo, whereby the purchaser buys the securities with an agreement to resell
the same at a future date.
The RBI, commercial banks and primary Dealers deal in the repos and
reverse repo transactions.
31
The financial institutions can

deal only in the reverse repo
transactions i.e. they are allowed
only to lend money through
reverse repos to the RBI, other
banks and Primary dealers.
The maturity date varies from 1
day to 14 days.
The two types of repos are:
a. Inter-bank repos (the transaction takes place between banks and DFHI).
b. RBI repos (The repos / reverse repos are undertaken between banks and the
RBI to stabilize and maintain liquidity in the market).
Repos and Reverse Repos are used for following purposes:a. for injection / absorption of liquidity.
b. to create an equilibrium between the demand for and supply of short-term
funds.
c. to borrow securities to meet SLR requirements.
d. to increase returns on funds.
e. to meet shortfall in cash positions.
vii) DISCOUNT AND FINANCE HOUSE OF INDIA (DFHI)

32
The Discount and Finance House of India is jointly owned by the RBI, the
public sector banks and all India financial institutions.
The DFHI helps in developing
and stabilizing the money market by

stimulating
activity in
the money
market instruments and developing secondary
market in those instruments.
The DFHI deals in treasury bills, commercial
bills certificates of deposits, commercial papers,
short term deposits, call money market and govt securities. It also
participates in repo operations.
Thus, the DFHI has helped corporate entities,
banks and financial institutions to invest their
short-term surpluses in money market
instruments.
viii) MONEY MARKET MUTUAL FUNDS:

(MMMFs):
33
The RBI introduced Money Market Mutual Funds to enable small investors
to participate in the money market. Thus, MMMFs mobilizes saving of
mutual funds and invest them in such money market instruments that mature
in less than one year.
The following are the important features of MMMFs:a. MMMFs can be set by scheduled commercial banks and public finance
institutions.
b. Individuals, corporates, etc can invest in MMMFs.
c. the lock-in period has been reduced to 15 days.
d. MMMFs are under the regulation of SEBI.
e. NRIs and Overseas Corporate Bodies can invest in MMMFs (on anonrepatriation basis) floated by commercial banks / public sector financial
34
institutions / private sector financial institutions. However, they do not need

separate permission from the RBI.
f. MMMFs are ideal for investors seeking low-risk investment for short-term
surpluses.
2) UNORGANISED SECTOR:
35
The unorganized Indian money market mainly comprises of indigenous

bankers, money lenders and unregulated non-banking financial
intermediaries.
Though they may exist in urban centers, their activities are mainly
concentrated in rural areas. In fact, 36% of rural households depend on these
for their financial requirement.
The main components of unorganized money market are:
i) INDIGENOUS BANKERS:
These financial intermediaries operate as banks
by receiving deposits, giving loans and dealing
in hundies (The hundi is a short term
indigenous bill of exchange)
The rate of interest varies from market to
market / bank to bank.
However they do not solely depend on deposits,
they may use their own funds.
They are called by
Shroffs,Chettis, etc.
different
names
like
Kathawals,
Saraf,
They provide loans to trade and industry and agriculture.

The main advantages of indigenous bankers are simple and flexible
operations, informal approach, personal contact, quick services and
availability of timely funds.
However, they have their drawbacks like a very high rate of interest (18%to
36%), combining banking with trade, interest in non-banking activities like
general merchants, brokers, etc.
ii)MONEY LENDERS:
36
Money lenders predominate in

villages and they deal in the
business of lending money.
Their interest rates are very high
Loans are given to agricultural
labourers, marginal and small
farmers, artisans, factory workers,
etc for unproductive purposes.
Their services are prompt, informal and flexible.
iii) UNREGULATED NON_BANK FINANCIAL INTERMEDIARIES
# Chit funds:
a. They are saving institutions wherein members make regular contribution to
the fund.
b. The fund is given to some member by bids / draws.
c. Chit funds are famous in Kerala and Tamil Nadu.
#Nidhis:
a. They are mutual benefit funds as loans are given to members (from the
deposits made by members themselves) at a reasonable rate of interest.
b. The loans are generally
given for purposes like
house
construction
/repairs. Nidhis are
prevalent in South India
37
# Loan companies:
a. Loan Companies (also called as finance companies) have capital in the form
of borrowings, deposits or owned funds.
b. They attract deposits by offering high rate of interest and other incentives.
c. Loans are also given at a very high rate of interest (36% t0 48% p.a).
d. Traders, small-scale industries and self-employed people are the main
participants.
iv) FINANCE BROKERS:
They are found in all major urban markets,
especially in cloth market, commodity
market and grain market.
They are intermediaries between lenders and
borrowers.
2.5 Primary Dealers

38
The system of Primary Dealers (PDs) in the Government Securities Market

was introduced by Reserve Bank of India in 1995 to strengthen the market
infrastructure of Government Securities.
DFHI was set up by RBI in March 1988 to activate the Money Market.
It got the status of Primary Dealer in February 1996. Over a period of time,
RBI divested its stake and DFHI became a subsidiary of State Bank of India
(SBI).
SBI had also set up a subsidiary in 1996 for doing PD business namely SBI
Gilts Limited.
Both these companies were merged in 2004 to become the largest Primary Dealer in the
country
Primary Dealers can also be referred to as Merchant Bankers to Government of India as
only they are allowed to underwrite primary issues of government securities other
than RBI
PDs are allowed the following activities as core activities:

1. Dealing and underwriting in Government securities.
2. Dealing in Interest Rate Derivatives.
39
3. Providing broking services in Government securities.

4. Dealing and underwriting in Corporate / PSU / FI bonds/ debentures.
5. Lending in Call/ Notice/ Term/ Repo/ CBLO market.
6. Investment in Commercial Papers.
7. Investment in Certificates of Deposit.
8. Investment in debt mutual funds where entire corpus is invested in debt
securities.
2.6 The Role of Reserve Bank of India

The Reserve Bank of India is the most important constituent of the money market.
40
The market comes within the direct preview of the Reserve Bank of India
regulations.
The RBI intervenes in the call money
indirectly in two ways By
providing
finance/additional
lines
funding
of
to
the
DFHI and other call money dealers.

By conducting repo auction Additional funding is provided through REPO
auctions which increase liquidity in the market and bring down call money
rates. RBIs reverse repo auction absorbs excess liquidity in the economy
and push up the call rates.
The aims of the Reserve Banks operations in the money market are:
To ensure that liquidity and short term interest rates are maintained at levels
Consistent with the monetary policy objectives of maintaining price stability.
41
To ensure an adequate flow of credit to the productive sector of the economy

and to bring about order in the foreign exchange market.
The Reserve Bank of India influence liquidity and interest rates through a
number of operating instruments - cash reserve requirement (CRR) of banks,
conduct of open market operations (OMOs), repos, change in bank rates and
at times, foreign exchange swap operations.
Steps taken by RBI:
Both the borrowers and the lenders are required to have current accounts
with the Reserve Bank of India.
This will facilitate quick and timely debit and credit operations.
The call market enables the banks and institutions to even out their
day to day deficits and surpluses of money.
Banks especially access the call market to borrow/lend money for
adjusting their cash reserve requirements (CRR).
The lenders having steady inflow of funds (e.g. LIC, UTI) look at the
call market as an outlet for deploying funds on short term basis
Entry Barriers
The entry into this field is restricted by RBI.
Commercial Banks, Co-operative Banks and
Primary Dealers are allowed to borrow and
lend in this market.
42
Specified All-India Financial Institutions, Mutual Funds, and certain

specified entities are allowed to access to Call/Notice money market only as
lenders.
Reserve Bank of India has recently taken steps to make the call/notice
money market completely inter-bank market.
Hence the non-bank entities will not be allowed access to this market
beyond December 31, 2000.
2.7 The Growth of Money Market in India
43
While the need for long term financing is met by the capital or financial markets,
money market is a mechanism which deals with lending and borrowing of short
term funds. Post reforms period in India has witnessed tremendous growth of the
Indian money markets. Banks and other financial institutions have been able to meet
the high expectations of short term funding of important sectors like the industry,
services and agriculture. Functioning under the regulation and control of the Reserve
Bank of India (RBI), the Indian
money markets have also exhibited
the required maturity and resilience
over the past about two decades.
Decision of the government to allow
the private sector banks to operate
has provided much needed healthy
competition in the money markets,
resulting
in
fair
amount
of
improvement in their functioning.

Quantum of liquidity in the banking
system is of paramount importance,
as it is an important determinant of the inflation rate as well as the creation of credit
by the banks in the economy. Market forces generally indicate the need for
borrowing or liquidity and the money market adjusts itself to such calls. RBI
facilitates such adjustments with monetary policy tools available with it. Heavy call
for funds overnight indicates that the banks are in need of short term funds and in
case of liquidity crunch, the interest rates would go up.
Depending on the economic situation and available market trends, the RBI
intervenes in the money market through a host of interventions. In case of liquidity
44
crunch, the RBI has the option of either reducing the Cash Reserve Ratio (CRR) or
pumping in more money supply into the system. Recently, to overcome the liquidity
crunch in the Indian money market, the RBI has released more than Rs 75,000 crore
with two back-to-back reductions in the CRR.
In addition to the lending by the banks
and the financial institutions, various
companies in the corporate sector also
issue fixed deposits to the public for
shorter duration and to that extent
become part of the money market
mechanism selectively. The maturities
of the instruments issued by the money
market as a whole, range from one day
to one year. The money market is also
closely
linked
with
the
Foreign
Exchange Market, through the process

of covered interest arbitrage in which the forward premium acts as a bridge between
the domestic and foreign interest rates.
2.8 Scope of Indian Money Market
The India money market is a monetary system that involves the lending and
borrowing of short-term funds. India money market has seen exponential growth
45
just after the globalization initiative in 1992. It has been observed that financial
institutions do employ money market instruments for financing short-term
monetary requirements of various sectors such as agriculture, finance and
manufacturing. The performance of the India money market has been outstanding
in the past twenty years.
Central
bank
of
the
country
the Reserve Bank of
India
(RBI) has always been
playing
the
regulating
major
role
in
and controlling the India
money
market. The intervention of RBI is varied - curbing crisis situations by reducing the
cash reserve ratio (CRR) or infusing more money in the economy.
46
47
3. Features/Characteristics of Indian Money Market

Every money is unique in nature. The money market in developed and developing
countries differ markedly from each other in many senses. Indian money market is
not an exception for this. Though it is not a developed money market, it is a
leading money market among the developing countries.
Indian Money Market has the following major characteristics: Dichotomic Structure: It is a significant aspect of the Indian money market.
It has a simultaneous existence of both the organized money market as well
as unorganized money markets. The organized money market consists of
RBI, all scheduled commercial banks and other recognized financial
institutions. However, the unorganized part of the money market comprises
domestic money lenders, indigenous bankers, trader, etc. The organized
money market is in full control of the RBI. However, unorganized money
market remains outside the RBI control. Thus both the organized and
unorganized money market exists simultaneously.
48
Seasonality: The demand for money in Indian money market is of a seasonal

nature. India being an agriculture predominant economy, the demand for
money is generated from the agricultural operations. During the busy season
i.e. between October and April more agricultural activities takes place
leading to a higher demand for money.
Multiplicity of Interest Rates: In Indian money market, we have many levels

of interest rates. They differ from bank to bank from period to period and
even from borrower to borrower. Again in both organized and unorganized
segment the interest rate differs. Thus there is an existence of many rates of
interest in the Indian money market.
Lack of Organized Bill Market: In the Indian money market, the organized
bill market is not prevalent. Though the RBI tried to introduce the Bill
Market Scheme (1952) and then New Bill Market Scheme in 1970, still there
is no properly organized bill market in India.
Absence of Integration: This is a very important feature of the Indian money
market. At the same time it is divided among several segments or sections
hitch are loosely connected with each other. There is a lack of coordination
among these different components of the money market. RBI has full control
over the components in the organized segment but it cannot control the
components in the unorganized segment.
49
High Volatility in Call Money Market: The call money market is a market
for very short term money. Here money is demanded at the call rate.
Basically the demand for call money comes from the commercial banks.
Institutions such as the GIC, LIC, etc suffer huge fluctuations and thus it has
remained highly volatile.
Limited Instruments: It is in fact a defect of the Indian money market. In our
money market the supply of various instruments such as the Treasury Bills,
Commercial Bills, Certificate of Deposits, Commercial Papers, etc. is very
limited. In order to meet the varied requirements of borrowers and lenders, It
is necessary to develop numerous instruments.
50
3.1 Participants in the Money Market
The transactions in the money market are of high volume involving large amount.
So, money market is dominated by a small number of large players.
Some of the important players in the
money market are:
Reserve Bank of India.
Discount and finance House of
India.
Financial Institution.
Non-banking finance companies.
Securities Trading Corporation of India.
Public sector undertakings (PSU).
The role of important players in the money market is discussed below:
*RESERVE BANK OF INDIA:
The reserve Bank of India is the most important player in the Indian Money
Market.
The Organized money market comes under the direct regulation of the RBI.
51
The RBI operates in the money market is to ensure that the levels of
liquidity and short-term interest rates are maintained at
an optimum level so as to facilitate economic growth
and price stability.
RBI also plays the role of a merchant banker to the
government. It issues Treasury Bills and other
Government Securities to raise funds for the
government.
The RBI thus plays the role of an intermediary and regulator of the money
market.
*GOVERNMENT:
The Government is the most active player and the largest borrower in the
money market.
It raises funds to make up the budget deficit.
The funds may be raised through the issue of
Treasury Bills (with maturity period of
91day/182day/364 days) and government
securities.
52
*CORPORATE FIRMS:
Corporate firms operate in the money market to raise short-term funds to
meet their working capital requirements.
They issue commercial papers with a maturity period of 7 days to 1 year.
These papers are issued at a discount and redeemed at face value on
maturity.
These corporate firms use both organized and unorganized sectors of money
market.
*BANKS:
Commercial Banks play an important role in the money market.
They undertake lending and borrowing of short term funds.
The collective operations of the banks on a day to day basis are very
predominant and hence have a major impact and influence on the interest
rate structure and the liquidity position.
53
*FINANCIAL INSTITUTIONS:
Financial institutions also deal in the money market.
They undertake lending and borrowing of short-term
funds.
They also lend money to banks by rediscounting Bills of Exchange.
Since, they transact in large volumes, they have a significant impact on the
money market.
*INSTITUTIONAL PLAYERS:
They Consist of Mutual Funds, Foreign Institutional Players, Insurance
Firms, etc.
Their level of Participation depends on the regulations.
For instance the level of participation of the FIIs in the
Indian money market is restricted to investment in Government Securities.
54
*DISCOUNT HOUSES AND PRIMARY DEALERS:

They are the intermediaries in the money market.
Discount Houses discount and rediscount commercial bill and Treasury
Bills.
Primary Dealers were introduced by RBI for developing an active secondary
market for Government securities.
They also underwrite Government Securities.
55
3.2 Importance of Indian money market

Wide-ranging reforms have been undertaken to develop the money market and
strengthen its role in the transmission mechanism of monetary policy. Three major
considerations that have guided rationalization of the structure in the money
market are: (i) ensuring balanced development of various constituents of the
money market, especially the growth of the collateralized market Vis--vis the
uncollateralized market; (ii) preserving integrity and transparency of the money
market by ensuring better disclosure of information; and (iii) rationalizing various
classes of participants across different market segments in order to strengthen the
efficacy of the LAF of the Reserve Bank. It provides a stable source of fund to
banks in addition to deposits, allowing alternative financing structure.
As a result of various reform measures, the money market in India has undergone
significant transformation in terms of volume, number of instruments and
participants, and adoption of risk management practices.
Market Development
Greater Flexibility for Participants in the Call Money Market
In view of the transformation of the call money market into a pure inter-bank
market, there is a need to consider greater flexibility to banks and PDs to borrow or
lend in this market, provided they have put in place appropriate risk management
systems which would address the asset-liability mismatches in their balance sheets.
56
In this context, banks have already started operating in an environment that

requires greater harmonization between sources and deployment of funds for assetliability management (ALM) purposes. Direct regulation in the form of prudential
limits on borrowing and lending eventually would need to graduate to a system,
where such limits are taken care of by banks own internal systems of ALM
framework. This would correct large mismatches between sources and uses of
funds by banks and thereby help the Reserve Bank in the proper assessment of
market conditions for the conduct of its liquidity management operations. There is
also, at the same time, a greater need for closely monitoring the movements of call
money rates.
Extension of the Repo Market
It has been the endeavor of the Reserve Bank to develop the repo market not only
for easing pressure from the uncollateralized call money market but also to
facilitate the emergence of a short-term rupee yield curve for pricing fixed income
securities. At present, only Central and State Governments securities are eligible
for market repo. However, State Government securities do not have wider
acceptability as there are hardly any repo operations based on them. As the fixed
income money market has been overwhelmingly dependent upon Central
Government securities, there is a need to consider broad-basing the pool of eligible
securities. In future, the growth of market repo will be driven by the short selling
activity in the government securities market as a reposed security can now be
delivered up to five days in view of the recent changes in the regulations governing
short sales
57
Development of a Vibrant Term Money Market

The term money market has not developed for several reasons. One of the major
reasons for this is that market participants have been unable to take a long-term
view of interest rates despite availability of Treasury Bills of varying maturities
and a reasonably developed swap market. In order to enable market participants to
take a long-term view on interest rates, it is imperative that the ALM framework is
strengthened and greater flexibility is allowed to the personnel managing treasury
operations in banks. The skewness in liquidity in the money market in terms of
chronic lenders and borrowers would get corrected as banks develop better ALM
systems. The development of the term money market is vital for strengthening
proper linkages between the foreign exchange market and the domestic currency
market, which, in turn, would provide an impetus to the derivative segment.
Relook at Inter-Bank Participation Certificates
Inter-Bank Participation Certificates, which can be used for evening out short-term
liquidity mismatches by banks, were introduced in October1988 in order to infuse
greater degree of flexibility in their credit portfolios. In view of rapid credit growth
in recent years, interest in IBPCs has again arisen. In this context, since
considerable time has elapsed since the guidelines on the scheme of IBPCs were
issued, the IBPC scheme with respect to duration, quantum in terms of the
proportion to the loan amount, eligible participants and transferability of IBPCs
needs a thorough review. Depending on the results of such a review, extending the
use of this instrument could also facilitate the asset liability management by banks,
58
improve day-to-day liquidity management and help develop a market for credit risk
transfer instruments between banks.
Futures on Policy Linked Interest Rates
Going forward, an Indian variant of the Federal Funds Futures on interest rates
linked to the Reserve Banks key policy rates may emerge. Trading in the futures
market would reveal important information about market expectation on the future
course of monetary policy. For instance, the trading of the Federal Funds Futures
provides key information to the Federal Open Market Committee (FOMC) in the
US in formulating its monetary policy.
Promoting Financial Stability
Default risk in the money market has the potential to create a contagion in the
financial markets and, therefore, needs to be mitigated. In this regard, experiences
of developed economies show that generally the self-regulatory organizations
(SROs) regulate activities of participants in the money market in terms of their
capital adequacy and conduct of business. Also, default resolution in most of these
markets is undertaken through the Contract Law and the Bankruptcy Law. In view
of international experience, there may be a case for empowering a suitable selfregulatory organization appropriately to act as a catalyst for the development of
market microstructure.
One of the fundamental forces that could contribute to more organic integration
across various segments of the financial market is the technological up gradation of
the payment and settlement system. The accomplishment of virtual Public Debt
Office (PDO) and Deposit Accounts Department (DAD) at the Reserve Bank,
59
coupled with the operationalization of the centralized funds management system

(CFMS).
3.3 Benefits / Advantages of Money Market

A liquid money market provides an effective source of long term finance to
borrower
A liquid and vibrant money market is necessary for the development of a capital
market, foreign exchange market and market in derivative instruments.
Helps in pricing different floating interest products
It helps in:
Development of trade & industry.
Development of capital market.
Smooth functioning of commercial banks.
Effective central bank control.
Formulation of suitable monetary policy.
60
3.4. Defects or Drawbacks of Money Market

Though the Indian money market is considered as the advanced money market
among developing countries, it still suffers from many drawbacks or defects. These
defects limit the efficiency of our market.
61
Some of the important drawbacks of Indian Money Market are:1. MULTIPLE RATE OF INTEREST: In the Indian money market, especially
the banks, there exist too many rates of interests. These rates vary for lending,
borrowing, government activities, etc. Many rates of interests create confusion
among the investors.
2. DICHOTOMY: Dichotomy i.e. existence of two markets (organized money
market and unorganized money market) is a major defect of the Indian Money
Market. The unorganized money market comprises of indigenous bankers,
moneylenders, chit funds, nidhis , loan companies and finance brokers that do
not come under the control and supervision of the RBI. This unorganized sector
is mainly concentrated in the rural areas and it does not differentiate between
short term and long term finance and between the purposes of finance. This puts
a limit on the RBIs control over the money market.
3. LACK OF INTEGRATION: The RBI finds it difficult to integrate the
organized and the unorganized money market. While the RBI can control and
supervise the working of the organized sector effectively, the heterogeneous
unorganized sector is out of RBIs control. There is no uniformity in the
practices and operations of the unorganized money market. Moreover, the
interest rates in both the markets are also different. Thus there is lack of
integration in the Indian money market.
62
4. MULTIPLICITY IN INTEREST RATES: There is diversity in rates of

interest in the Indian money market. This multiplicity in the interest rates is due
to lack of mobility of funds from one section of the money market to another.
The rates differ from institution to institution even for funds of the same
duration. Although the wide differences are being narrowed down, the existing
differences do hamper the efficiency of the money market.
5. ABSENCE OF ORGANISED BILL MARKET: The existence of a wellorganized bill market is essential for effective linking up various credit
agencies. It refers to a mechanism where bills of exchange are purchased and
discounted by commercial banks / financial institutions. The bill market is not
yet developed in India due to the following reasons:
Banks keeping large amount of cash.
Preference for borrowing rather than discounting bills.
Overdependence on cash / cheque transactions.
High stamp duty on usance bill, etc.
6. SHORTAGE OF FUNDS: The Indian money market is characterized by
shortage of funds. Various factors like inadequate banking facilities, low
savings, lack of banking habits, existence of parallel economy, etc lead to
shortage offends. Thus, demand for short-term funds far exceeds the supply.
This results in high interest rate. However now banks are flush with funds
especially in urban area as people prefer to invest their money with banks rather
than keeping them as deposits in the unorganized sector.
63
7. SEASONAL STRINGENCY OF MONEY: Since agriculture continues to

play a major role in the Indian economy, farm operations do influence the
demand for and supply of money. Thus seasonal stringency of money and high
interest rate during the busy season (November to June) is a striking feature of
the Indian money market. Also, there a wide fluctuations in the interest rates
from one reason to another. However, the RBI makes attempt to reduce the
fluctuations by adding money into the money market during the busy season
and withdrawing the funds during the slack season.
8. INADEQUATE CREDIT INSTRUMENTS: The Indian money market
lacked adequate short-term paper instruments till1985-86. Only call money
market and bill market existed. Also there were no specialized dealers / brokers
in the money market. After 1985-86 the RBI Introduced new credit instruments
in the market like CDs, CPs, MMMF, etc, but they are not yet fully developed
in India.
9. ABSENCE
OF
WELL-ORGANISED
BANKING
SECTOR
IN
RURALAREA: There is poor banking system in the rural area due to the
problems of overheads and maintenance of branches. The commercial bank
branches in rural area are only 40% of the total bank branches. This also
hampers the development of money market in India.
10.INEFFICIENT AND CORRUPT MANAGEMENT: Faulty selection, lack of
training, poor performance appraisal and faulty promotions result in
inefficiency and corruption in the banking sector. This adversely affects the
success and performance of money market. These are some of the major
drawbacks of the Indian money market; many of these are also the features of
our money market.
64
4. Findings & Suggestions

4.1. FINDINGS
According to the findings INVESTORS IN MUTUAL FUNDS:
Mutual funds in India are open to investment by following investors:

1. Residents including:
a) Resident Indian Individual
b) Indian Companies
c) Indian trust/charitable trusts
d) Banks
e) Non Banking Finance companies
f) Insurance companies
g) Provident funds
2. Non Residents Including:
a) Non residents Indians
b) Overseas corporate bodies
3. Foreign entities:
a) Foreign Institutional Investors registered with SEBI.
Foreign citizens/entities are however now allowed to invest in India.
4.2 SUGGESTIONS
65
Few suggestions relevant to the development of money market in India are

enumerated below:
(i)
There should be a mechanism to make the call range bound which

may reduce uncertainty and provide confidence to the bankers for
lending/borrowing. In the context, it is emphasized that Repos and
Reverse Repos conducted by RBI has the potential to set the floor
and ceiling in the call money market.
(ii)
Besides, Repo mechanism, call money market, needs to be

supplemented by Open Market Operation (OMO). OMO can
influence interest rate as well as volumes in the market.
(iii)
Non-bank segment should be brought under the same regulation on

par with the banks early as possible so that level playing field is
created.
(iv)
Transparency should be ensured in money market transaction. There

should be screen based trading with two way quotes for each money
market instruments.
(v)
The lock-in period of CDs and CPs should be completely removed

in a phase manner.
66
(vi)
Retailing of government papers should be encouraged. The primary

dealers can play a role in this context.
(vii) Currently FIIs are allowed in government dated securities in primary

as well as secondary market. More FII participation could be
encouraged.
(viii) Money Market Mutual Funds should be set up by various banks and
institutions. This would increase the retail participation in the
market.
67
5. Conclusions
The money market is a vibrant market, affecting our everyday lives. As the shortterm market for money, money changes hands in a short time frame and the players
in the market have to be alert to changes, up to date with news and innovative with
strategies and products. The withdrawal of non-bank entities from the inter-bank
call-money market is linked to the improvement of settlement systems. Any timebound plan for the evolution of a pure inter-bank call/notice money market would
be ineffective till the basic issue of settlements is addressed.
In brief, various policy initiatives by the Reserve Bank have facilitated
development of a wider range of instruments such as market repo, interest rate
swaps, CDs and CPs. This approach has avoided market segmentation while
meeting demand for various products. These developments in money markets have
enabled better liquidity management by the Reserve Bank
68
6. Webliography
www.google.com
http://business.mapsofindia.com/india-market/money.html
RBIs site --- http://rbi.org.in
SBI DFHIs site --- http://sbidfhi.com/
Indian Institute Of Banking & Finance --- http://www.iibf.org.in
http://kalyan-city.blogspot.com/
http://en.wikipedia.org
www.rbi.org.in/weekly statistical supplement/ various issues.co.in
www.investopedia.com
www.bseindia.com
www.nseindia.com
www.economics.indiatimes.com
www.gktoday.in
69
7. BIBLIOGRAPHY
SOURCE
AUTHOR
1. Interest Rate Swaps
Nasser Saber
2. Emerging Money Market
R.S. Aggrawal
3. Indian Money Market Structure, operation and
M.S. Gopalan
Development
4. Financial Management
Prasanna Chandra
5. Security Analysis and Portfolio Management
P.K. Bandgar
70

Indian Money Market

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K. J.

SOMAIYA COLLEGE OF ARTS & COMMERCE

K. J. SOMAIYA COLLEGE OF ARTS & COMMERCE

Prof. JINAL DOSHI

DR. (Smt.) SUDHA VYAS

I MR. PARTH MUKESH SHAH The student of B.COM BANKING &

On the event of completion of my project THE STUDY ON INDIAN MONEY MARKET.

THE STUDY ON INDIAN MONEY MARKET

Objectives of Money Market

Meaning of Money Market

2.1. Definition of Money Market

2.2. History of Indian Money Market

2.3. Types of Money Market Instruments

2.4. Structure of Indian Money Market

2.5. Primary Dealers

2.6. The Role of RBI

2.7. The Growth of Money Market in India

2.8. Scope of Indian Money Market

THE STUDY ON INDIAN MONEY MARKET

Features /Characteristics of Indian Money Market

3.1. Participants in the Money Market

3.2. Importance of Indian Money Market

3.3. Benefits / Advantages of Money Market

3.4. Defects / Drawbacks of Indian Money Market

Findings & Suggestions

THE STUDY ON INDIAN MONEY MARKET

THE STUDY ON INDIAN MONEY MARKET

THE STUDY ON INDIAN MONEY MARKET

THE STUDY ON INDIAN MONEY MARKET

1.1 Objectives of Money Market

It means to keep a balance between the

demand for and supply of money for short term

To promote economic growth. Money market can do this by making funds

THE STUDY ON INDIAN MONEY MARKET

1.2 Review of Literature

Article: India call money ends

THE STUDY ON INDIAN MONEY MARKET

Article: Money Market Integration in India: A Time Series Study

THE STUDY ON INDIAN MONEY MARKET

1) What is your annual income?

2) How do you invest your savings?

THE STUDY ON INDIAN MONEY MARKET

3) Do you have any knowledge about Money Market Instruments?

5) How much risk would you be willing to take?

6) In your opinion, what is expected rate of return in a year?

THE STUDY ON INDIAN MONEY MARKET

7) How would rate your experience with Indian Money Market?

8) Is recession had affected your investment decision?

THE STUDY ON INDIAN MONEY MARKET

THE STUDY ON INDIAN MONEY MARKET

1.4 Limitations of the Study:-

THE STUDY ON INDIAN MONEY MARKET

The study is based on a limited scope of area

THE STUDY ON INDIAN MONEY MARKET

Meaning of Money Market

THE STUDY ON INDIAN MONEY MARKET

2.1 Definition of Money Market

THE STUDY ON INDIAN MONEY MARKET

2.2 History of Indian Money Market

Recommendations of Three Committees

THE STUDY ON INDIAN MONEY MARKET

Sukhmoy Chakravarty Committee

The Vaghul Committee

THE STUDY ON INDIAN MONEY MARKET