2.  CALL MONEY
 NOTICE MONEY
 TREASURY BILLS
 REPOS
 COMMERCIAL PAPER
 CERTIFICATE OF DEPOSITS

3.  Call money market is an inter-bank market
 Day to day surplus funds are either borrowed by or
lent to banks
 Maturity of loans is 1 day to 14 days
 Repayable on demand at the option of either
lender or borrower, i.e. on call
 Notice Money – Money lent for a period exceeding
I day
 Liquidity is very high

4.  Commonly referred to as T-Bills
 Represent obligations of the GOI
 Tenor: 14-days, 90-days, 182-days, 364-days
 Do not carry an explicit coupon rate
 Sold at a discount and redeemed at par
 Have no credit risk
 Have negligible price risk
 Banks and Primary Dealers (PDs) are main
holders – as part of their SLR requirements

5. FUNDS
SECURITY
A B
1) Requires short term 1) Wants to make a short
funds investment
2) Does the Repo 2) Does the Reverse Repo
3) Sells securities 3)Buys securities
4) Simultaneously agrees to 4)Difference between sale price
repurchase the securities at a and repurchase price represents
later date at a slightly higher interest income to B
price.
5) Difference between sale
price and repurchase price
represents interest cost to A

6.  Unsecured short-term instrument
 Issued by large corporates
 Sold at a discount and redeemed at par
 Interest rate will depend on
overall short-term money market rates and
credit standing of the issuer
 Individual investors can invest in CPs.
 Banks cannot accept CPs
 Usually has a maturity period of 90 – 180 days

7.  Short-term, transferable instrument
 Issued by banks and financial institutions
 Generally risk-free
 CDs carry an interest rate
 Banks, financial institutions, corporates and
MFs are primary investors in CPs.
 Usually has a maturity period of 3 months to 1 year

8.  GILT EDGED SECURITIES (G-Secs)
 PSU BONDS
 CORPORATE BONDS/DEBENTURES