Types Of Money market
Organized Sector:
The organized sector of the money market consists of the Reserve Bank of India, commercial banks,
companies lending money, financial intermediaries such as the Life Insurance, Credit and
Investments Corporation of India, Unit Trust of India, Land Mortgage Banks, Cooperative Banks,
Insurance Companies etc. and call loan brokers, and stock brokers.
• RBI
• Commercial Banks
• Co operative Banks
R.B.I
Commercial Banks:
• Commercial banks are financial institutions that accept demand deposits from the general public,
transfer funds from the bank to another, and earn profit.There are two types of commercial banks
Scheduled and Non Scheduled.
Scheduled Banks:
• Scheduled Banks as the name suggest are the banks, which are accounted in the Second Schedule
of the Reserve Bank of India (RBI) Act, 1934. To qualify as a scheduled bank, the bank should
conform to the following conditions:
• The total minimum value of paid up capital and reserve must be of Rs. 5 lacs.
• The bank requires to satisfy the central bank that its affairs are not carried out in a way that causes
harm to the interest of the depositors.
• The bank needs to be a corporation rather than a sole-proprietorship or partnership firm.
Scheduled banks enjoy certain rights such as:
• Right to receive refinance facility from the apex bank
• Entitled for currency chest facility.
• Right to become members of clearing house
Scheduled Commercial Public Sector
Banks:
• Nationalised banks:
• Allahabad bank
• Andhra bank
• Bank of Baroda
• Bank of India
• Bank of Maharashtra
• Canara bank
Public sector banks:
Public Sector Banks (PSBs) are banks in which the government has a majority stake that is more than
50%. The shares of public sector banks are listed on stock exchanges.
As of now, India has 27 Public Sector Banks. This number includes SBI, its 5 associates and 19 other
nationalized banks. Two other banks, namely IDBI and Bhartiya Mahila Bank are two banks which
have been categorized by RBI as “Other Public Sector Banks”.
State Bank of India (SBI) is India’s largest bank by assets. It has around 17,000 branches and around
200 foreign offices. It is the banker to millions of Indians and has over 2 Lakh employees.
Private Sector Banks:
• In 1993, RBI issued revised guidelines regarding the entry of private sector banks.
Therefore, New private sector banks are the ones which were incorporated as per such
revised guidelines. Currently, there are 7 new private sector banks:
• Axis Bank Limited
• Bandhan Bank Limited
• DCB Bank Limited
• HDFC Bank Limited
• ICICI Bank Limited
• IndusInd Bank Limited
• IDFC Bank Limited
• Kotak Mahindra ING Vysya Bank
• YES Bank Limited
Scheduled Foreign Banks in India:
• RBI policy towards the presence of foreign banks in India is based on two cardinal
principles viz. reciprocity and single mode of presence. As of now, there are 45 foreign
banks which are operating as branches in India. They are as
• HSBC Ltd.
• Qatar National Bank
• DBS Bank Ltd.
• The Royal Bank of Scotland plc
• American Express Banking Corporation
• Bank of America
• Citibank N.A.
• J.P. Morgan Chase Bank N.A.
Scheduled Co-operative Banks of India:
• The cooperative bank is also regulated by the RBI. They are governed by the banking regulations
act 1949 and banking laws (Co-operative Societies) act, 1965. These banks provide most services
such as savings and current accounts, safety deposit lockers, loan or mortgages to private and
business customers.
• Urban co-operative banks:
• State Co-operative Banks:
• regional rural banks:
Non Scheduled banks
• As per the Second Schedule of the Banking Regulation Act of 1965 a bank must satisfy the
following conditions, to get fully authorized to run banking business in India. The required two
conditions are:
• The bank should have paid a reserve capital of 5 lakh rupees to the Reserve Bank of India and this
capital must be maintained throughout their operational period.
• The RBI must be satisfied that the banks affairs are not conducted in a manner that is harmful to
the interest of its depositors.
• Those banks that abide by this regulation are called as Scheduled Banks and banks that do not
come under this regulation are called as Non-Scheduled Banks
Coperative Banks:
• A co-operative bank is registered under the cooperative society’s law of the state in which it is
founded.
• Serves the needs of the rural sector in general and the agricultural sector in particular.
• Provides short-term and medium-term credit to agriculture.
STATE CO OPERATIVE BANKS
• Organised at a state level.
• Apex of the three-tier co-operative credit structure.
• There were 28 SCBs, 14 of which were scheduled banks.
• It is only through them that the RBI provides credit to co-operatives.
• RBI generally provides loans to SCB on interest rate, one or two per cent lower than Bank
Rate.
• They operate as 'balancing centres' for central cooperative banks (CCBs).
• They raise funds on their own to make them available to the CCBs and through them or
directly to primary societies in such districts where CCBs are not in operation.
CENTRAL CO-OPERATIVE BANKS
• It can be divided into two parts:
• Co-operative Banking Union: Members are only Co-operative societies.
• Mixed control Co-operative Bank: Members are co-operative societies and individuals.
• These are the middle level in the three-tier structure.
PRIMARY CO-OPERATIVE BANKS (PCBS)
They are non-agricultural credit societies.
Two types:
• urban co-operative banks
• salary earners' societies
Organized Sector in Indian Money Market:
• Unorganised segment of the Indian money market is composed of
unregulated non-bank financial intermediaries, indigenous bankers
and money lenders which exist even in the small towns and big cities.
Their lending activities are mostly restricted to small towns and
villages.
(A) Indigenous Bankers:
Indigenous bankers include those individuals and private firms which
are engaged in receiving deposits and giving loans and thereby acting
like a mini bank
Cont..
(B) Unregulated Non-Bank Financial Intermediaries:
There are different types of unregulated non-bank financial intermediaries in India. They are mostly
constituted by loan or finance companies, chit funds and ‘nidhis’. A good number of finance
companies in India are engaged in collecting substantial amount of funds in the form of deposits,
borrowings and other receipts.
Cont..
(C) Moneylenders:
• Moneylenders are advancing loans to small borrowers like marginal and small farmers, agricultural
labourers, artisans, factory and mine workers, low paid staffs, small traders etc. at very high rates
of interest and also adopt various malpractices for manipulating loan records of these poor
borrowers.
• There are broadly three types of moneylenders:
(i) Professional moneylenders dealing solely with money lending;
(ii) Itinerant moneylenders such as Kabulis and Pathans and
(iii) Non-professional moneylenders.
