ECONOMIC ANALYSIS

MONEY MARKET

BY SHEKINAH ROY ROHANN PRADHAN MUNTAZIR ABBAS SHAHJAHAN MALIK PARAG BANDHATE SHIVANI NANDWANA

 It deals in funds and financial instruments having a maturity period of one day to one year.  .  It covers money and financial assets that are close substitutes of money.INTRODUCTION The Money Market is a market for lending and borrowing of short term funds.  The instruments in the money market are of short term nature and highly liquid.

 It is a wholesale market for short term debt instruments.It is not a single market but a collection of different markets. lenders succeed in getting creditworthy borrowers for their  . DEFINITION : Money Market refers to a mechanism whereby on the one hand borrowers manage to obtain short term loanable funds and on the other.

FEATURES AND DEFECTS DICHOTOMY LACK OF INTEGRATION MULTIPLICITY/DIVERSITY/CHANGE IN INTEREST RATES ABSENCE OF ORGANISED BILL MARKET .

SHORTAGE OF FUNDS IN THE MONEY MARKET SEASONAL STRINGENCY OF FUNDS INADEQUATE BANKING FACILITIES INADEQUATE CREDIT INSTRUMENTS .

STRUCTURE .

ORGANISED SECTOR CALL MONEY MARKET TREASURY BILLS MARKET COMMERCIAL BILLS MARKET CERTIFICATE OF DEPOSIT MARKET .

COMMERCIAL PAPER MARKET MONEY MARKET MUTUAL FUNDS REPO MARKET DISCOUNT AND FINANCE HOUSE OF INDIA .

UNORGANISED SECTOR Indigenous Bankers Money Lenders Chit Funds .

Financial Brokers Finance Companies .

FUNCTIONS OF MONEY MARKET It provides a mechanism to achieve equilibrium between demand for and supply of short term funds.  It provides funds to users to meet their short term needs at fair prices.  .  It helps the RBI in the effective implementation of monetary policy.  It provides ample avenues for investment of short term funds with fair returns.

 It also provides funds in non inflationary way to the government to meet its deficits. . It helps in allocation of short term funds through inter bank transactions and money market instruments.

PLAYERS AND THEIR ROLES RBI Banks Financial Institutions Government Corporates Institutional Players .

resources.elasticity and stability it is not comparable to foreign money markets.CONCLUSION The detailed analysis of the Indian Money Market suggests that the Money Market in India does not satisfy the criteria of a developed money market but shows symptoms of an under developed money market.  .  Moreover in terms of organisation.

 It lacks number of sub-markets and does not attract foreign funds.  . But the deficiencies of the Indian Money Market are slowly but steadily overcome by the policy measures undertaken by the RBI from time to time.

Sign up to vote on this title
UsefulNot useful