MONEY MARKET INSTRUMENTS

CALL MONEY MARKET

Call money market is important segment of money market. Borrowing and lending in call money market are for short duration ranging from overnight to a fortnight. Call loans are repayable on demand at the option of the borrower or lender or at very short notice. Call loans are therefore very liquid, next to cash. Call / notice money is the money borrowed or rent on demand for a very short period. When money is borrowed or rent for a day, it is known as call (overnight) Money.

Participants in Call Money

Commercial banks, both Indian and foreign

Co-operative banks

DFCHI

STCI

Primary dealers

TREASURY BILL MARKET

Treasury bill (TBs) are an important instrument of short term borrowing by the government. They have been used as a tool of monetary management in the economy because their purchase and sale and the yield rate on TBs have an impact on liquidity in the economy and the interest rate structure. TBs are the promissory notes or a kind of finance bill issued by the government under discount for a fixed period, not extending beyond one year, with a promise to pay the amount stated therein to the bearer of the instrument. TBs are used by the government for raising short term funds from institutions or the public for bridging temporary gaps between receipts (both revenue and capital) and expenditure.

Participants in treasury bills market

The reserve bank of india

State bank of india

Commercial banks

State government and other approved bodies

Discount and finance house of India (DFHI) as a market maker in TBs,

Corporate entities

Other financial institutions such as LIC ,UTI, GIC, NABARD IDBI, IFCI AND ICICI  ETC..

BILL REDISCOUNTING SCHEME ( BRS )

A bill of exchange is a written instrument containing an unconditional order, signed by the maker ( called drawer), directing a certain person ( called drawee ) to pay a certain sum of money specified in the instrument, only to, or to the order of, a certain person ( called payee ), or to the bearer of the instrument on demand or at the expiry of a specified period. Bill of exchange is a negotiable instrument.