Banking and insurance: The money market

Pages :

26 pages

Format :

.doc

Published date :

04/01/2009

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Summary :

 
 

Table of Contents Banking and insurance: The money market Table of Contents

 
  1. Introduction
  2. Functions of the money market
    1. Benefits of an efficient money market
  3. The Indian money market
    1. Steps to develop the money market in India
    2. Money market instruments and centers
  4. An overview of a treasury bill
    1. Participants in the T-bills market
    2. Sale of T-bills
  5. Commercial papers (CP)
    1. Summary of guidelines for issuance of CP
  6. An overview of commercial papers
  7. An overview of certificates of deposits
  8. Various terms of money market
  9. Money market vs mutual funds
  10. A study of money market securities
  11. Conclusion

Abstract

The money market is a market for financial assets that are close substitutes for money. It is a market for overnight to short-term funds and instruments having a maturity period of one or less than one year. It is not a place (like the Stock market), but an activity conducted by telephone. The money market constitutes a very important segment of the Indian financial system. The main players are: Reserve Bank of India (RBI), Discount and Finance House of India (DFHI), mutual funds, banks, corporate investors, non-banking finance companies (NBFCs), state governments, provident funds, primary dealers, Securities Trading Corporation of India (STCI), public sector undertaking (PSUs), non-residents Indians and overseas corporate bodies. A well-functioning money market facilitates the development of a market for longer-term securities. The interest rates for extremely short-term use of money serve as a benchmark for longer-term financial instrument. An efficient money market benefits a number of players. It is provides a stable source of funds to banks in addition to deposits, allowing alternative financing structures and competition. It allows banks to manage risks arising from interest rate fluctuations and to manage the maturity structure of their assets and liabilities.

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