Features of Indian Money Market

What are Indian Money Market Features-Frequently Asked Questions-Features of Indian Money Market

The money market is a part of the larger financial market where cash and other short-term financial assets trade. These financial assets and tools have terms of less than a year, which makes them very liquid. So, financial goods like commercial papers and Treasury bills buy and sell on the money market. We’ll look at the features of indian money market and talk about the related topics in this area.

There are a lot of ways to promote something. The financial market, which is the main place where different types of financial assets make and trade, is an example of this type of organization. The financial market can break up into a number of smaller markets, with the capital market and the money market being the most important. Let’s learn more about how the money system works, shall we?

Features of Indian Money Market

The money market is a global place where currencies and other easily traded products can buy and sell. Trading doesn’t happen in a place like a stock market. Instead, it happens over the phone. The money market depends on truth and dependability when it comes to paying back debts. To serve your research and educational needs, here is a list of features of indian money market. Read on for an in-depth analysis of the benefits of a money market account topic.

Financial Sector Players

On the Indian market today, there are many different kinds of financial institutions, such as community banks, non-banking financial intermediaries, and export-import banks, just to name a few. They can handle the money needs of many different areas.

Secure Money Market

The inter-bank call money market is the most important part of the Indian banking system. There is the most doubt about this part of the financial market. The vast majority of India’s money market make up of securities released by the government or a part of the government.

Binary Organization

India’s financial field can split into two groups: those that organize and those that are not. Both groups are working at the same time. The Reserve Bank of India, which also know as the RBI, takes part in the organized money market, just like all scheduled private banks. On the other hand, the part of the money market that not controll make up of local money lenders, native bankers, merchants, and so on.

Extremely Unstable

On the call money market, people give money for short periods of time. In this particular case, you have to pay the usual rate. Most of the time, businesses are the ones who ask for call money. Because liquidity has been uneven, the call money market has stayed very unpredictable. These imbalances affect organizations like scheduled commercial banks, cooperative banks, and primary dealers in a big way.


There are two different groups on the Indian financial market: the organized and the disorganized. They rarely talk to each other and work together on projects. Because of this, there is a big difference in the interest rates between the two markets.

Cultural Exclusion

The acceptance and discount house areas of the Indian money market are not very well developed. This is because the Indian market for bills is not yet fully developed. The money markets of India and the rest of the world have nothing to do with each other. There isn’t much money going from the Indian Money Market to other markets around the world.

Geographic Constraints

Unlike stock platforms, the money market is not limited by where it is in the world. On every continent, there is the possibility for money and financial institutions to exist. Even though Mumbai, Calcutta, and Chennai all have their own money markets, their financial systems are all tied together and rely on each other.

Central Bank

The Reserve Bank of India has a lot of power to oversee and control the banks and financial system of the country. Even so, the RBI has never directly supervised the banking sector of the country. Because of this, loan rates for companies that aren’t organized are much higher than those for businesses that are. The country’s Central Bank is in charge of controlling the flow of money based on how the economy is doing. In times of financial trouble, the other member institutions can take money from The Central Bank. This means that a Central Bank that knows everything controls, regulates, and directs the amount of money in circulation.There isn’t a well-developed market for bills on the Indian banking market. Even though the Reserve Bank of India tried with the Bill Market Scheme (1952) and the New Bill Market Scheme (1970), the bill market in India not controlled.

Rate Multiplicity

There is a big difference between the interest rates offered on the Indian money market. They are different from one lender to the next, from one time period to the next, and from one client to the next. Again, interest rates are different in markets that are organized and markets that are not. India’s money market offers very different rates of interest because of this.
Infrastructure problems in the business banking sector

Most of the time, business institutions are the ones who give short-term loans. India, on the other hand, has a large number of banks and bankers who work on their own and follow their own rules. They are not under the RBI’s control. So, it’s not surprising that the money market is not easy to use and well-organized.

Seasonal Shifts

There are two different times of the year in terms of cash flow needs: peak times and off times. The busy season starts in November and lasts until April, when farmers start taking their crops to market. There is a big need for money right now. The slow season for us starts in May and goes through October. As more people start paying back their loans, the number of people who need new loans goes down by a lot.


Where Would you File the Indian Financial Market?

There are two main types of the Indian financial market: the organized and the unstructured. The word “Organized Sector” refers to the national and regional governments of India, as well as the Reserve Bank of India (RBI), other commercial banks, rural banks, and banks from other countries. The Reserve Bank of India is the government agency in charge of organizing and keeping an eye on the business.

In what Ways does the Money Market not Go Far Enough?

The downsides of investing in the money market are low returns, a drop in spending power, and the fact that some money market assets are not FDIC-insured. Like other types of investments, money market funds have both pros and cons that buyers should think about.

What are the Problems with the Indian Financial System?

Some interest rates on the Indian money market are set by the government, while others are set by cooperative and private banks, different financial institutions, and so on. This is because it is hard to move money quickly between the different parts of the money market.


Some examples are getting rid of interest rate caps on the money market, putting up auctions for treasury bills, and making prudential rules stricter. To get more investors, the terms of other assets like Commercial Paper and Certificates of Deposit gradually short. We hope you found this guide, in which we explained features of indian money market, informative and useful.

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