Money market is the part of financial market and one of important concept of Finance because finance is flow of fund and money market provides system for flowing of funds and commercial papers. In simple words, money market is that market in which short term commercial papers are bought and sold and short term loan are given and taken. Main dealers of money market are the banks and financial institutions who need fund in very short term and they can not take this fund from capital market because in capital market, they can only receive long term fund with huge amount of loan and share capital.
So, Money market is so important for Indian developments because sometime banks need money for paying their customers, they can get this short term loan from Indian money market.
Rate of short term loan is high than long term loan of capital market. SBI, ICICI bank, HDFC bank, UTI and LIC and other commercial and financial intuitions are the main dealers and they deal in commercial papers.
Main instruments of Money market:-
Instruments mean short term assets which can be include following
☼ Commercial papers
in commercial papers , promissory notes , bill of exchange are included .
☼ Treasury bills
Treasury bills are the bills which are issued by central Govt. of India. They can be bought or sell like commercial papers.
☼ Bankers acceptance
Banker’s acceptance is also the form of short term assets on the basis of short term loan can be taken.
☺ Money fund
Money fund is also main instrument of money market. This fund which can be used for fulfilling the need of banks to repay customers.
Indian money market is most affected by interest rates, rate of foreign exchange and other related factors. Short term loan is one of factor for development of India because , banks and financial institution can work effectively , if Indian money market is so active with providing short term loan at lower rate of interests and also provides call money loans for one hour to one day. It will be helpful to Indian bank to avoid tension for providing money in shortage of fund period .
So, Money market is so important for Indian developments because sometime banks need money for paying their customers, they can get this short term loan from Indian money market.
Rate of short term loan is high than long term loan of capital market. SBI, ICICI bank, HDFC bank, UTI and LIC and other commercial and financial intuitions are the main dealers and they deal in commercial papers.
Main instruments of Money market:-
Instruments mean short term assets which can be include following
☼ Commercial papers
in commercial papers , promissory notes , bill of exchange are included .
☼ Treasury bills
Treasury bills are the bills which are issued by central Govt. of India. They can be bought or sell like commercial papers.
☼ Bankers acceptance
Banker’s acceptance is also the form of short term assets on the basis of short term loan can be taken.
☺ Money fund
Money fund is also main instrument of money market. This fund which can be used for fulfilling the need of banks to repay customers.
Indian money market is most affected by interest rates, rate of foreign exchange and other related factors. Short term loan is one of factor for development of India because , banks and financial institution can work effectively , if Indian money market is so active with providing short term loan at lower rate of interests and also provides call money loans for one hour to one day. It will be helpful to Indian bank to avoid tension for providing money in shortage of fund period .
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