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Money Market

Money Market. Main Players. RBI DFHI(Discount and Finance House of India) MF Corporate Investors NBFC’s State Govt. PF PD STCI(Securities trading corporation of India) PSU NRI’s. Indian Money Market-Average turnover. Instrument Volume in Crore’s Rates

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Money Market

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  1. Money Market

  2. Main Players • RBI • DFHI(Discount and Finance House of India) • MF • Corporate Investors • NBFC’s • State Govt. • PF • PD • STCI(Securities trading corporation of India) • PSU • NRI’s

  3. Indian Money Market-Average turnover Instrument Volume in Crore’s Rates • Call Money- 258.30 (7.50-8.90) • Notice Money- 13,117.85 (7-9.10) • Term Money- 85 (9-9.75) • CBLO- 64,431 (8.51-9.05) • REPO- 40,498 7.50

  4. Role of RBI in Money Market • Influence liquidity and interest rates through a number of operating instruments • CRR • OMO • REPOS • Bank Rates • Foreign exchange

  5. Steps taken by Govt. to develop the money market • DFHI was set up as a money market institution jointly by RBI,public sector banks and financial institutions in 1988 to impart liquidity to MM • 182-day T-Bill , CD and inter bank participation certificate were introduced in 1988-89. • CP in 1990 • Interest rate ceiling on inter bank term money(10.5 to 11.5)

  6. In the 1990’s-Committee under M.Narasimham • STCI in 1994 to provide an active secondary market in G-Sec • PD in 1995 to ease the barriers to entry • Satellite dealers in 1999 to inject liquidity • Allowing FII’s • Auctioned T-bills were introduced • LAF introduced in 2000 • The minimum lock in period was brought down to 15 days

  7. Interim LAF in 1999 • Forward rate agreements(FRA’s) • Interest rate swaps(IRS’s) • Negotiated dealing system(NDS) in 2002 • Implementation of RTGS system in 2004 • Clearing corporation of India Limited (CCIL) in 2002 • CBLO was operationalised as a money market instrument in 2003

  8. MM instruments • T-bills • Call and notice money • CP • CD • CB • CBLO

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