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The above features / defects of Indian Money Market clearly indicate that it is relatively
less developed and has yet to acquire sufficient depth and width. The deficiencies are slowly and
steadily overcome by policy measures undertaken by RBI from time to time.
5. Refinance By RBI :-
The RBI uses refinance facilities to various sectors to meet liquidity shortages and control
the credit conditions. At present two schemes of refinancing are in operations :- Export credit
refinance and general refinance.
RBI has kept the refinance rate linked to bank rate.
6. MMMFs:-
Money Market Mutual Funds were introduced in 1992. The objective of the scheme was to
provide an additional short-term avenue to the individual investors. In 1995, RBI modified the
scheme to allow private sector organisation to set up MMMFs. So far, three MMMFs have been
set up one each by IDBI, UTI and one in private sector.
7. DFHI:-
The Discount and Finance House of India was set up on 25th April 1988. It buys bills and
other short term paper from banks and financial institutions. Bank can sell their short term
securities to DFHI and obtain funds in case they need them, without disturbing their investments.
8. The Clearing Corporation Of India Limited (CCIL) :-
CCIL was registered in 2001 under the Companies Act, 1956 with the State Bank of India
as Chief Promoter. CCIL clears all transaction in government securities and repos reported on
NDS (Negotiated Dealing System) of RBI and also Rupee / US $ foreign exchange spot and
forward deals.
9. Regulation Of NBFCs:-
In 1997, RBI Act was amended and it provided a comprehensive regulation for non bank
financial companies (NBFCs) sector. According to amendment, no NBFC can carry on any
business of a financial institution including acceptance of public deposit, without obtaining a
Certificate of Registration from RBI. They are required to submit periodic returns to RBI.
10. Recovery Of Debts:-
In 1993 for speedy recovery of debts, RBI has set up special Recovery Tribunals. The
Special Recovery Tribunals provides legal assistance to banks to recover dues.