money mkt ppt

7/29/2019 Money Mkt Ppt

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PRESENTED BY:Ravi (82)

Rishab Singh Kohli (83)

Ritu Sangwan (84)

Surbhi Gupta (106)

Piyush Sharma (128)


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What is Money Market? Features of Money Market?

Objective of Money Market?

Importance of Money Market?

Disadvantage of Money Market?

Instrument of Money Market?

Structure of Indian Money Market?

Recent development in Money Market


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As per RBI definitions A market for short terms financialassets that are close substitute for money, facilitates theexchange of money in primary and secondary market.

The money market is a mechanism that deals with the

lending and borrowing of short term funds (less than oneyear).

A segment of the financial market in which financialinstruments with high liquidity and very short maturities are

traded.


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FINANCIAL

MARKETS

MONEY

MARKET

CAPITAL

MARKET


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Transaction have to be conducted without the help of brokers. It is not a single homogeneous market, it comprises ofseveral submarket like call money market, acceptance & billmarket.

The component of Money Market are the commercial banks,acceptance houses & NBFC (Non-banking financialcompanies).

In Money Market transaction can not take place formal like

stock exchange, only through oral communication, relevant

document and written communication transaction can be done.


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To provide a reasonable access to users of short-term funds

to meet their requirement quickly, adequately at reasonable

cost.

To provide a parking place to employ short term surplus

funds.

To provide room for overcoming short-term deficits.

To enable the Central Bank to influence and regulate liquidity

in the economy through its intervention in this market.


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Development of trade & industry.

Development of capital market.

Smooth functioning of commercial banks.

Effective central bank control. Formulation of suitable monetary policy.

Non inflationary source of finance to government.


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Purchasing power of your money goes down, in case of up ininflation.

Dichotomized and loosely integrated

Irrational structure of interest rates

Highly volatile market

Seasonal stringency of loan able funds

Lack of funds in the money market

Inadequate banking facilities


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A variety of instrument are available in a developed moneymarket. In India till 1986, only a few instrument were available.

They were

Certificate of Deposit (C.D)

Commercial Paper (C.P) Treasury bills

Call money

Commercial bills,

Promissory notes Banker's Acceptance Repurchase agreement (Repo)


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MoneyMarket

CommercialPapers

Certificateof deposit

Treasurybills

RepurchaseAgreement

Banker'sAcceptance

Call money

Commercialbills

Promissorynote


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CP is a short term unsecured loan issued by a corporationtypically financing day to day operation.

CP is very safe investment because the financial situation

of a company can easily be predicted over a few months.

Only company with high credit rating issues CPs.


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Highly rated corporate borrowers, primary dealers

(PDs) and satellite dealers (SDs) and all-India

financial institutions (FIs).


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(T-bills) are the most marketable money market security.

They are issued with three-month, six-month and one-yearmaturities.

T-bills are purchased for a price that is less than theirpar(face) value; when they mature, the government pays theholder the full par value.

T-Bills are so popular among money market instrumentsbecause of affordability to the individual investors.


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Banks, Primary Dealers, State Governments,

Provident Funds, Financial Institutions, Insurance

Companies, NBFCs, FIIs (as per prescribed norms),NRIs & OCBs can invest in T-Bills.


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A CD is a time deposit with a bank.

Like most time deposit, funds can not withdrawn beforematurity without paying a penalty.

CDs have specific maturity date, interest rate and it can beissued in any denomination.

The main advantage of CD is their safety.

Anyone can earn more than a saving account interest.


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The call money market is an integral part of the Indian Money

Market, where the day-to-day surplus funds (mostly of banks)

are traded. The loans are of short-term duration varying from 1

to 14 days.

The money that is lent for one day in this market is known as

"Call Money", and if it exceeds one day (but less than 15 days)

it is referred to as "Notice Money".


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Repo is a form of overnight borrowing and is used by those

who deal in government securities.

They are usually very short term repurchases agreement,

from overnight to 30 days of more.

The short term maturity and government backing usually

mean that Repos provide lenders with extremely low risk.

Repos are safe collateral for loans.


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A promissory note is a negotiable instrument,

wherein one party (the makerorissuer) makes an

unconditional promise in writing to pay a determinate

sum of money to the other (thepayee), either at afixed or determinable future time or on demand of the

payee, under specific terms.


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A bankers acceptance (BA) is a short-term creditinvestment created by a non-financial firm.BAs are guaranteed by a bank to make payment. Acceptances are traded at discounts from face valuein the secondary market. BA acts as a negotiable time draft for financingimports, exports or other transactions in goods. This is especially useful when the credit worthinessof a foreign trade partner is unknown.


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A Commercial Bill assists you to raise finance throughthe drawing and discounting of negotiable bank bills.

Under this facility, Bank agrees to both accept and

discount a customer's bills. You can choose from an

array of facilities utilising the latest financial markettechniques to suit your individual requirements. This

is commonly used for medium and long term

financing.


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I :- ORGANISED STRUCTURE

1. Reserve bank of India.

2. DFHI (discount and finance house of India).

3. Commercial banksi. Public sector banks

SBI with 7 subsidiariesCooperative banks20 nationalized banks

ii. Private banksIndian Banks

Foreign banks4. Development bank

IDBI, IFCI, ICICI, NABARD, LIC, GIC, UTI etc.


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II. UNORGANISED SECTOR1. Indigenous banks2 Money lenders3. Chits

4. Nidhis

III. CO-OPERATIVE SECTOR1. State cooperative

Central cooperative banks

Primary Agri credit societiesPrimary urban banks2. State Land development banks

Central land development banksPrimary land development banks


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Integration of unorganized sector with the organized sector Widening of call Money market Introduction of innovative instrument Offering of Market rates of interest Promotion of bill culture

Entry of Money market mutual funds Setting up of credit rating agencies Adoption of suitable monetary policy Establishment of DFHI Setting up of security trading corporation of India ltd. (STCI)


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money mkt ppt

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